How Trump's Retirement Advice Executive Order Could Affect Your Retirement

Shaun O-Brien AFL-CIO

Last week, President Donald Trump ordered the Department of Labor to reconsider the Obama administration's retirement savings protections due to begin taking effect in April, with an eye toward revising or completely eliminating them. 

Remember, these protections are based on two core ideas. First, if you are a retirement investor, your best interests should come first—they should not take a back seat to the financial interests of your financial adviser. Second, how your adviser gets paid cannot conflict with your best interests.  

How likely is the Trump administration to cut back on these retirement protections? Based on the comments of White House press secretary Sean Spicer, it sounds like they already have made up their minds either to cut or eliminate them. Spicer called the rule “a solution in search of a problem.” 

What could eliminating these protections mean for you?

1.  You may lose hard-earned retirement money. The Labor Department created the new retirement investor protections because lots of evidence showed working people and retirees were paying a huge price for conflicted investment advice through higher fees and worse returns. If you continue to live with that conflicted advice, you could end up with about 25% less in retirement money over 35 years of investing than if you were getting recommendations from someone who is paid to work in your best interest. This easily could amount to tens, if not hundreds, of thousands of dollars less for you when you retire.  Or, you might have to work longer to make up for it. 

 2. You won't automatically be able to trust your retirement investment adviser.  Trusting the wrong person to help you make good decisions about your retirement investments can cause you deep and permanent financial harm. If the Trump administration gets rid of or weakens the retirement investor protections, it will continue to be your job to figure out whom you can trust—that is, who is a “fiduciary” legally required to act in your best interest versus who is just a salesperson getting paid with commissions and kickbacks.

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Reposted from the AFL-CIO.

Posted In: Allied Approaches, From AFL-CIO

Union Matters

An Invitation to Sunny Miami. What Could Be Bad?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

If a billionaire “invites” you somewhere, you’d better go. Or be prepared to suffer the consequences. This past May, hedge fund kingpin Carl Icahn announced in a letter to his New York-based staff of about 50 that he would be moving his business operations to Florida. But the 83-year-old Icahn assured his staffers they had no reason to worry: “My employees have always been very important to the company, so I’d like to invite you all to join me in Miami.” Those who go south, his letter added, would get a $50,000 relocation benefit “once you have established your permanent residence in Florida.” Those who stay put, the letter continued, can file for state unemployment benefits, a $450 weekly maximum that “you can receive for a total of 26 weeks.” What about severance from Icahn Enterprises? The New York Post reported last week that the two dozen employees who have chosen not to uproot their families and follow Icahn to Florida “will be let go without any severance” when the billionaire shutters his New York offices this coming March. Bloomberg currently puts Carl Icahn’s net worth at $20.5 billion.

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