every night to the authors of those who share their views with us. we love hearing from you. email me at loudobbs.com. follow us on twitter at 50. >> happy new year have of a great weekend. "the willis report" is next. gerri: i am gerri wollastonite is a special edition of "the willis report" as hispanics our giving advice on the confusing topic of retirement. talk about the classic 4% and if it should be changed. ways to double the next day but a person has been a record year for stocks hitting new highs. but how high can they go before the next direction and how should small investors handle their portfolios? recently i spoke with the founder of the of vanguard group and bother of index funds for his stake. >> don't take for granted it will continue. expect over the next decade

no point to look shorter. the returns will be lower than historical norms that is around 9 percent per year for stocks i think maybe six or 7 percent is more likely over the next decade. but i think it is highly likely that rational expectations for stocks in the range of six or 7 percent will be better than the returns on bonds. we have to hold them we need the protection. stocks will do around twice that well so don't get out of the market. we prepared for big bombs. i cannot tell a field of 25%. i cannot say that. gerri: new talk about the bond market. and some of those that are

in retirement or relying on bonds? what should they be doing? >> if they are relying on bonds they have gotten a much higher yields that will run around 2.5 percent. very though. but long term it is more like 5%. gerri: i want to talk about why you see that decline with the stock market's return. it seems u.s. has the strong economy possibly the strongest on the planet but yet you say you expect lower stock market returns? >> what creates stock market returns is not the market is of a derivative of of the value created by corporate america. that value today gives the 2% yield and grows by four 5%. about 9% with 4.5% dividend

yield. but that at 2 percent is 4.5 today it is a dead weight loss for future returns. it is clear the mass will not justify future high returns. gerri: you don't like these and your indexed bonds yield with the very first when it -- the first one in 1974 now is seems to me lots of individual investors are following your advice to move from actively managed funds to the index funds. what do you have to say? this seems like to have been proven right and public opinion is on your side. >> public opinion and warren buffett. [laughter] he is a 85% with the vanguard fund.

with all due respect to war in but there is uncertainty. but it does worry me to be honest. this year goes into the record books. the index is up around 11%. so they run up 3%. only one-quarter of the index had the international market that was down. so the s&p 500 will look better than it will look long term. gerri: i want to ask about bill grossi and pimlico as the father of a regional fund investing he was a misleading pimlico now lot

of assets are flowing out. what does that is -- what does that say about the future of the mutual-fund industry? >> it will have to do change it has the problem that is most of the fund groups and small fund groups are owned by private enterprise people and corporations in giant conglomerates in the half to a bezoar please the shareholders of the ministry company at the same time pleasing the shareholders of the fund. and those of her being served as the management companies and 180-degree u-turn that is where we get the advantage because we are owned by our own flag behalf

shareholders it is valuable. gerri: and very different from other companies. >> no one has ever copied us 87 or copied you. you are one of a kind. thanks for being on the show is great to see you. >> nice to invite me. good to see you. gerri: americans heading into retirement get a failing grade of their knowledge. just 20 percent has an idea how to make their nests day class. -- mistake last. great to have you here. 80% failing? are you surprised by this? >> i will tell you i am not because basically we have a financial illiteracy problem but over the age of 55 to 70

those that need to be the smartest about money if you will work your entire life if you'll have a basic financial literacy plan and understand retirement planning you could feel -- fail. gerri: only to correct answered questions. we talk about this all the time. what needs to be done? >> it starts with mandatory financial education but for baby boomers get it now. it is specifically recommended. people bait box and take classis. but you have to start to with the retirement plan 63 percent of baby boomers to have over $100,000 had a financial planner. that was a good part. the bad part was of those people only one out before had a financial plan.

baby boomers think they have a financial planner beverly it is a glorified sales person is not possible to have a retirement plan without the plan. so they should go get the financial plan to run their numbers because it is all about the math with retirement. gerri: make a good point. but i was not surprised by this. look at what has happened over the last two years people lost half of their retirement is it any wonder there so disconnected to their finances? is anybody surprised? do people feel the the market would be safe? we just recently had a poll 56 percent of americans have lost faith in financial institutions. that is a big issue.

not just the people are stupid but they are disconnected in their talent to be part of the conversation. i don't know how to solve that. >> americans are not stupid. go meet with a financial planner. one of the first things you should educate yourself is if you have a financial planner recommended that you won a fiduciary somebody who has to put your interest first. no conflict of interest or commission but a fee based financial planner. if you have that plan to meet with them and least once a year. we had a very strong market with a phenomenal year as we sit there is that the all-time high. sova really is the ideal time don't have your head in the sand it is not too late

and the key is to start now. gerri: day que david. >> my pleasure. gerri: more to come with your retirement is said of -- i know how to double your nest egg impacting most of the nation's 401k bush to even consider giving the government your life ♪ you don't need to think about the energy that makes our lives possible. because we do. we're exxonmobil

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gerri: the ral gerri: the federal government wants you to consider allowing all calcium to guard your retirement savings. i am not making this up for a new federal rule allows you to roll over money from your employer's 401k to put it into a pension plan. should you do that? we should get some background aren't -- background explanation there is a corporation that stands behind pensions and now they want your 401k money also? why? >> there is a couple of different reasons.

that people in retirement are not prepared to handle the stream of income that they could be having in the future so this is a way to move to do annuities for the future cash flow to give you a way to get a payment. gerri: so they take the money and do what? >> you go live from the 401k into your pension plan so the government will back that up. in case the pension defaults. gerri: but will they turn that into an annuity? >> it is like that is a you get the monthly payment based on what you put in. but they have the money. gerri: you have got to be kidding me. this sounds ridiculous. >> several financial

advisers are skeptical because the government doesn't necessarily have a great track record with people's money or their own. the assets and though liabilities the liabilities exceed the assets. gerri: that is a great point the organization to hear elvis, they don't have money there and the worry is they cannot stand behind those they have already guaranteed. so why could they handle the? >> that is a big concern so visors are saying you are better off keeping control of your 401k and your money. you can do a better job to manage yourself. gerri: this just gives me a headache. with a new investment vehicle out there my immediate thought is to we

have enough investment vehicles as it is? people are already confused. adding something else just makes it confusing. >> for sure. ian the problem with the pension once the money is in there it is locked up. if you need that for health care emergency you cannot access that until you retire not to mention if you die that pension dies with you so it is not part of your inheritance so with your 401k due to leave that or borrow against it there are benefits to keep it as a 401k. gerri: come back and tell us whose idea this was and where it came from to discover that entomology i think this is crazy. gerri: have a great weekend. gerri: how would you do that?

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gerri: everybody knows they need to save for retirement but it can be hard to do. we'll say you need at least $1 million to retire comfortably. so how do you start to double your nest egg? ed is here with his advice. i see these numbers all the time. 40% of boomers are not on track for basic expenses in retirement and one-third of americans have no savings at all. it is astonishing but yet if you are diligent about

setting aside money to do with all the time over and over a can can you double your savings? >> easily. but if you keep putting money everybody knows that take get off the top. pay yourself first say you cannot say no not this week gore this month. the earlier acustar it the better off you are. the greatest of money-making asset any individual can process this time. so capitalized. gerri: is the time the value of money. i totally sign onto that. but people think if i'd tried to double my money in 10 years i have to have a huge stock allocation 100 percent or 90 percent. >> that is too dangerous to

be too aggressive too late. you cannot have 90 percent figure '60s and '70s hoping for the big hit. what if it is the other way? >> we see that something people need to talk about. >> the difference between tax-deferred and tax-free. it comes down to one little word that is where you get your ee in. tax-deferred means you don't pay on taxes yet the tax-free means never. you have to start building tax-free because that grows the fastest because it is not eroded by tax is. a big difference between the i.r.a. and the roth i.r.a.. '01 billion dollars number in the i.r.a. depending on the tax rate may be only worth 600,000 but if you have 1 million in the roth i.r.a. is 1 million.

gerri: you do pay the taxes. >> a relatively small deduction up front to have the tax-free income for the rest of your life. theoretically it only works in theory people say you could have invested that money but nobody ever invest a tax refund. when i did more taxes as i prepared more where will we spend that? gerri: i have to ask another question. we talk about this all the time. i tried to tell people you have to save and invest. i know things got wacky the you have to put the money down. >> right off the top the roth i.r.a. contribution 5500 or 6500. do it. gerri: good to see you. middle-class america is just

not saving for retirement. a result from a survey coming up and how your 401k stacks up against the rest.@?

gerri: how your 401k plan matches up with 35,000 retirement plans across the country we see just how generous employers are and what kind of -- what types of offerings people are facing. are you getting the most from your 401k? we are "covering your assets". 305,000? that is astonishing you could get data on that many plans. tell me first how did you conduct a study or how long ago began how many individuals were involved? >> we've partnered with bright scope food took data

from all these plans they have been building this database for a while so we could sit down to look at plans through the middle 2000's to see how employees are doing and though the plants are doing it is the largest data set ever to be analyzed. gerri: i want the details. so start with the company match. what did you learn? >> first of all, four of five employers are giving some kind of contribution. and they have recovered which is great news. the most common way it is we've put a dollar in then the employer contributes the most common way is up to 6% so it is $0.50 on the dollar or $1 / dollar at 6% to.

gerri: but the most common is 50%. maybe you do better or worse but now you know, what most people of either getting. so how many options. so what is the average? >> the averages 25 options in the 401k plan. there is into ways to think about this. the employee can put together their own investment strategy or there also offering target date funds to put the money into the single fund and they asset allocations for you but to have that range of options with a variety and play and so with the risk tolerance will be different so this range of options is

helpful. gerri: with different obligations. you and i have talked about this. >> we have found in a variety of studies that we can look at this studied not just regional funds but all what goes into the for a 1k plan and the fees have been dropping for the small planes -- plans. but employees. gerri: but talk about the low-cost fund it could be the etf for the mutual-fund but what are the fees? what should i be willing to pay for the mutual fund?

>> it depends on the international fund you will pay more because it is more complicated purses' the large cap u.s. equity funds is lower-cost. gerri: give me the range. what deal like? >> what we find is the average is 50 or 60 basis points for the u.s. stock fund across all plants if it is smaller you will have though lower-cost options because the fees paid for the overall cost. the small plants have certain overhead they have to cover. if you are a larger employer you will have access to more lower-cost funds. but the thieves have been trending down. gerri: day you have this on your web site? >> we do ici.org.

gerri: if you think your for a while -- or for a 1k is not up to snuff maybe you don't have said decent employer match then go to ici.org and ask for a better deal if it is of great way to do it. great to have you here. gerri: you ever feel you don't have the money put away for retirement? you are not alone according to a new wells fargo said a more than half said they will save down the road. not now. but that strategy can be risky. well fargo joins us now joe you talk to a bunch of people by telephone. not just wells fargo people but a broad range of americans.

i was shocked at the proportion of people who were not doing anything at all. >> one-third of americans are not actively savings. but is more alarming one out of five has saved exactly zero. not 1 penny. gerri: you can say people who are 25 years old but this secret is if you say that 25 you are golden the earlier you start the better off you are. >> that is the other disturbing find 55 percent said i will delay and worried tomorrow. that is a problem because to your point you start at a young age you get the benefit of compounded earnings. gerri: why are people not saving? why are they saying we will

do well later? what is that pressure to not so put money aside? >> seven out of 10 said saving for retirement is a lot harder than they thought. but paying day-to-day bills and saving of the same time is difficult. gerri: isn't a factor of the economy? people are unemployed and underemployed? americans have not had a raise is in nine years. it is a long time since americans have made more money. >> it is challenging and hard for people to save but 50 percent said they will sacrifice on discretionary expenses so they'd need to take financial inventory to just get started down the road. 72 percent said they wish they had started saving earlier. so just sit down and look at

your expenses. and people are surprised when they do it only takes $50 to get started. gerri: people don't budget anymore. put it away to begin with gore said it aside before i don't think about it then they don't budget anything else. why is that a problem? to make people are overwhelmed or challenged. our best advice for those with access that 85 percent of respondents said if i did not have access to the 401k plan i would not have started. so people need to take advantage. gerri: the big problem is people borrow from the 401k all the time. all the time. people ask me if they should borrow from their 401k now want to take a vacation.

i don't understand. you have to set aside and not touch. >> that should be a last resort and there are hardships but make that a last resort it is the long-term future and the way to build retirement security. gerri: great to have you on the show gm. when we come back we're "covering your assets" with advice on retirement why here's a question for you: if every u.s. household with a computer used sleep mode when they weren't using it, how much could we save on electricity each year? up to $1 billion? $3 billion? $4.5 billion? the answer is... up to $4.5 billion. using your computer's built-in energy-saving features can generate real household savings. take the energy quiz -- round 2. energy lives here.

gerri: retirement savings used by countless americans may actually do more harm than good to the bottom line. joining me now from would financial group and romney said dagger a reporter for "the wall street journal". sova 4% rule is how to take at of your retirement savings as he passed the

money not more or less than 4 percent every year now people say that is crazy. >> that was the guy back in the day when you could get a 6% on government bonds or the mix of fifties' sixties stock bonds the you could take out safely with inflation. to still keep the space tension the with interest rates very low people questioned if that is reasonable. gerri: if you don't let the takeout 4% you only let me take out 3% so i have to have more money? to meet you need more so that does not account for someone who has a small portfolio not to mention an market movements that will dent your pot of money you have to retire on. that does not account for the long-term defense if you have to% one year that will be viewed less long-term see

you need to adjust that for the future years. gerri: very smart. people think doesn't this depend on what i make? how well at my doing for my bonds? if you look to the future what do you see or what type of growth? >> not necessarily people maybe make money over the last 10 years with the average of six or 7 percent and that is okay but when they take out the income you don't just look at the average rates of return. with of all the tile market of the stock market goes down to take out a much larger percentage of assets. gerri: okay. though warnings the cold wind is blowing. what should be the general rule? >> we say 3 percent is the new 4% is oversimplified but

what people do is start off with a particular amount of money they think they need but do not adapt to extra or if there is a down year they don't cut back and that is their life style but they don't plan for the big ticket items or the next new car they need in retirement. gerri: that is hard. you cannot predict the health issues or other expenses. >> but you can have control over the amount of debt you carry into you retirement if it is high interest credit-card eliminate that if you carry a mortgage get that down. even if not high rates that will drag on your investments and less to tap for retirement. gerri: now choose which of the topic there is a debate people who are in retirement

should use actively managed funds or etfs or index fund. what is your favorite in answer? >> my favorite answer is look at where your money is when you were in retirement. if you take money out of those investments make sure you have the distribution to sustain those withdrawals. looking at the managed money funds they have not done as well as the s&p index. gerri: is that your vote? to begin to take money at a retirement accounts that would be more safe. or look at the individual bonds or preferred stock holdings and tell maturity. gerri: but if you are not in retirement rights now the building your nest egg getting the biggest one you can setting aside as much money as you can but should be active fund or index or a mix?

>> we are agnostic to the active or passive debate it comes down to the individual managers of to bring value but times they bring more value than others for active managers may outperform as much as 50% but most of the time it is 20%. if you learn how to get into that some of them bring value. maybe not large cap but other areas where there are discrepancies. it is about what brings the best overall portfolio return. >> but what eats into investors' portfolios the passive is probably your better bet but over time the amount of fees that people pay out hurts the long-term retirement security. gerri: and the debate rages on. thanks for coming on the show.

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gerri: at the time when experts caution magistrates will likely rise investors are considering raising rates friday good value? the chief financial analyst good to see you craig. you cannot blame people for looking for some type of richard. the national average cd rates pays 0.1%.

five years? that does not even break 1%. people a desperate for yields what is wrong with their rising rates? >> people are looking for yields. people fear they put the money into the cd then the interest rates will go up so to combat that they have the products that come in different forms. so then to invest elsewhere they are known as the ball but cd. and there are stepping up cd's that are regular intervals of are the most common and we also took that -- to a look of what benefits the date of the individual investor.

gerri: tell us about the liquid no penalty. >> the idea is it gives the ability to tap into that cd without penalty. you can get all or some principle the reason why investor burt -- investors like this they feel it could be reinvested at higher rates elsewhere but the deals are much lower than traditional cds were of line savings accounts. but the yields half of the traditional cd. >> i don't go for that what about the bump up? >> even with the on-line savings accounts you can do better to put your money but the problem is too often

just have that option but that differential is wide enough in so many cases you cannot but to the high enough yield to recruit that interest before maturity. so that is a much better way to go. that would be the better option than the bomb but options. the step up has more certainty you know, exactly when or by how much it will increase. you know, what you start as and end at but we found even then it is less than a shopping around for the traditional one of the same maturity. so the moral of this story is in concept it sounds great butted reality be one to the kind of value that investors are expecting.

gerri: certificates of deposits get the play and develop. thanks great advice. what were the favored investments of 2014 and issued you put your money there? thanks. ♪ [ male announcer ] fedex® has solutions to able global commerce that can help your company grow steadily and quickly. great job. (mandarin) ♪ cut it out. >>see you tomorrow. ♪ they are a glowing example of what it means to be the best.

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♪ ♪ gerri: and finally this hour, we're taking a look at some of the best and worst investment performers of 2014 with help from 24/7 wall street and dan schafer, resident and ceo of schafer asset management. thanks for coming on the show. >> my pleasure. gerri: i was surprised by some of the things on this list. i would have never said they were top performing, starting with an india fund as the top mutual fund. tell me about that. >> well, there's a change in the parliament there. the prime minister's party in more than 30 years has taken other parliament, or at least the majority, so they're going

to get a lot of things done, some taxes and business changes, so it's very bullish. this year it just took off. gerri: so it's the matthew z india fund, up 66%. and then we have an etf that did gangbusters too, up 60%, a small capp india -- >> yeah, small caps did very well especially in a low interest vierpd. gerri: nuveen high yield, tell me about this. this is your area. you know about this. >> well, you know, this is a little nerve-wracking. people are chasing yield, and for a fund to be up, what, about 18%, that's kind of risky. i wouldn't be chasing this thing next year because of the risk involved in munis and interest rate risk -- gerri: what about high fuel next year? it's been super popular because of this search for yield. should you run away? should you jump it now? >> well, i think you need to keep your eye on it. some of the high yielders are starting to come down in value. the pipelines or some of the

muni, some of the junk bonds, but there is tremendous amount of risk. if this global deflationary scenario starts to spread into the united states into some of these bonds, the value of these bonds could drop dramatically even if the treasury rates stay low because of the risk in the spread. gerri: okay. words of warning there. large caps. so, you know, we always look at large caps, we love to talk about large caps. everybody knows the stock. southwest the big performer, up 16% year to date. and let me just say this about this, this is a company that does not have a baggage fee, and for that reason alone, i think they should be the best stock of 2014. >> you know, it's a very well-managed company, and a lot of airlines hedge their fuel. so they may be one of the ones because their net income has done so well that they don't go into the market and hedge the fuel. gerri: so they don't have that cost. >> right. a lot of airlines say if we expect prices of jet fuel to go up, we're going to go long to hedge it, and what's happened? the markets have come down.

so they're on the wrong side of that trade, so they're still paying the higher costs based on that hedge. it gets a little complicated, but the bottom line is it hits the bottom line. gerri: good operator, bad operator, it's those hedges that cost money. >> right. gerri: ipos, obviously, we talked about alibaba quite a bit on this network. but if you want to see the best one, it's a company called radius health? >> yes, the health care. the cure for cancer, biotechs, even janet yellen talked about biotechs, that they may be too fluffy at one point. this was the year for biotechnology. the indexes have gone up, and many of those biostocks, but people are chasing companies that don't really have earnings. that's the hardest part. gerri: i've heard this story before. i've heard it ends badly. >> and we've seen them crash, absolutely. gerri: so radius health, osteoporosis sis treatment. book value of 23 million -- >> but there are no earnings.

gerri: big zero. >> yeah. negative. so people are buying hope. gerri: tough year for commodities, in particular iced coffee? >> no, no, iced coffee did very well, but most of that was made in the first three months of the year. we took that trade using the exchange-traded fund. the commodity indexes are down over 20%. commodities have been deflating. so every once in a while you'll get a pop -- gerri: iced coffee? >> no, ice exchange which trades the futures contract for -- gerri: i was completely confused by that because i had never heard of a commodity. okay. i think the big takeaway was if you did well in 2014, are you likely to repeat? >> don't chase what worked well in 2014 and expect it to happen in 2015. that's the moral of the story. even though they did well this particular year. and just like that india fund, that's an isolated area. that's a one, a select fund. it's not a broad fund. it's not even total of all the emerging markets, it's just one

area of india. gerri: dan, thanks for coming on. that's it for this special edition of "the willis report." thanks for joining us, have a great night. ♪ ♪o our website for everything else. that is it. neil: welcome, everybody, i am neil cavuto. it is not a fox news alert. many think the health care law is flawed. still, attacks on obamacare are political. visit putting politics aside, the dangers of the law are very real and very, very scary. arsong >> this thing is totally out of control.