man and woman with mouths open looking upset (Photo: Shutterstock)

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Sure, there are tools and calculators, but a report from Cerullipoints out that more than 40 percent of participants in 401(k)plans don't have an official source for retirement advice—and amongthose with less assets, the gap is particularly severe.

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In its report The Cerulli Edge—U.S. Retirement Edition, Cerullialso points out that fully half of plan participants in their 50sare in the same boat.

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"Tools and calculators helping investors translate accountbalances to replacement ratios and overall 'retirement readiness'(including assumptions for market returns and life expectancy) arehardly new, but providers must realize the need for expandedcustomization in this regard," Anastasia Krymkowski, associatedirector at Cerulli Associates, is quoted saying.

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Among the problems faced by those without a place to go forretirement advice is the fact that other sources of income asidefrom the 401(k), such as Social Security, are often overlooked. Infact, the report points out, only 18 percent of active participantseven realize that most of their retirement income will come fromSocial Security, even though it makes up the largest portion ofincome for retired households with less than $2 million ininvestable assets.

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Planners who serve as sources of expert advice need to considerparticipants' behavioral biases, in particular with regard toannuities, as well as be able to counsel investors on the tradeoffsassociated with annuities in the quest to nail down guaranteedincome. At the same time they need to remind retirees thatguaranteed income doesn't have to be an all-or-nothingstrategy—particularly since annuities don't necessarily have apositive image thanks to recent investigations; participants maysee them as expensive and way too complicated to deal with.

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Other often-overlooked dilemmas include the question of how topay for health care—despite the amount of stress this causesparticipants—and how to manage retirement income to minimizetaxes.

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And there's a need for help with drawdown strategies beyond theso-called 4 percent rule, particularly among participants who lackunderstanding of how to plan efficiently to finally start to usethe money they've been saving all their working lives.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.