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A Year-End Financial To-Do List For Retirees

Morningstar Investment Research

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A Year-End Financial To-Do List for Retirees - by Morningstar Investment Research

Although worries about the so-called fiscal cliff still loom large and a late-inning sell-off isn't out of the question, the year 2012 is likely to go down as a pretty strong one for investors. The S&P 500 Index has posted a nearly 18% gain for the year to date through Dec. 18, and many foreign stocks and foreign-stock funds have gained upward of 20% for year. Bonds have also rallied strongly, with high-risk categories such as emerging markets and high yield notching the strongest returns. Holding cash wouldn't have gotten you too far, given that money market yields are close to nonexistent, but it's a good bet that most investors holding balanced portfolios earned positive--and in some cases strongly positive--returns. But with their account balances up solidly, investors might be lulled into a false sense of complacency and avoid making any changes at all. Morningstar's Christine Benz offers an overview of eight key steps retirees should take to put their portfolios and finances on track as the year winds down.

Don't Rely on Brokerages or Fund Companies to Fix Your Missing RMDs

I'm deciding what holdings to sell to meet minimum distributions from my retirement account for this year. What happens if I don't specify which part of the account from which the money should be distributed.

Morningstar assistant site editor Adam Zoll answered this question, pointing out that with Dec. 31 fast approaching, now is the time of year that many retirees have required minimum distributions, or RMDs, on their minds. These are yearly withdrawals of funds from retirement accounts, such as 401(k)s and traditional IRAs, that must be taken beginning the year after the year in which the account holder turns age 70 1/2 (the deadline is April 1 the first year and Dec. 31 in subsequent years). Annual amounts are based on a formula that factors in life expectancy. The government req uires RMDs as a way to move money out of tax-sheltered retirement accounts and into taxable accounts. Click here to read more.

Among the other topics we addressed this week:

Morningstar Manager of the Year Nominees for 2012. We've added two new Manager of the Year categories: Alternatives and Allocation Fund.

4 Ways We Can Beat Mr. Market. StockInvestor editor Paul Larson offers tips to help you recognize the extremes and keep your head when everyone else is losing theirs.

Tactical Tips. StockInvestor editor Paul Larson offers up practical tips on stop-loss orders, shorting, lawless geographies, and MLPs.

Larson: How the Crash Altered My Strategy. StockInvestor editor Paul Larson is keeping a wary eye on black swans, black boxes, and high-leverage companies.

Playing the Hand We're Dealt. The market isn't always serving up the ideal wide-moat sto ck with a 5-star rating.

Larson: 15 Things I Believe. StockInvestor editor Paul Larson lists the principles that guide his investing strategy.

Top 10 Dividend Stocks of Our Ultimate Stock-Pickers. While few of our Ultimate Stock-Pickers focus solely on dividends, income-paying stocks have become important contributors to the portfolios of many of our top managers.

AMT Problem Looms Over Fiscal Cliff Debate. If left unpatched, a provision designed to keep the wealthy from avoiding taxes could also raise tax bills for millions of middle-income households.

These 5-Star Stock Funds Had Hiccups in 2012. Despite strong long-term records, some funds trail their peers for the year.

Economic Growth: Great for Everyone but Investors? While it may be intuitive to presume strong economic growth translates into strong stock market performance, the evidence suggests otherwise.

Don't Neglect Tax- Loss Selling as 2012 Winds Down. Higher future capital gains rates might make losses more valuable, but waiting increases the uncertainty.

Can a Few Changes Alter the Perception (and Trajectory) of These Funds? Eaton Vance has been busy making changes to its suite of covered-call CEFs, but will investors take the bait?

If a Little Is Good, More Must Be Better. As the Fed is flooding the markets with liquidity, market-implied inflation expectations soar higher.

Wide-Moat Laggards That Could Become Leaders. These stocks' underperformance in 2012 has created buying opportunities.

Is It Time to Sell Bonds and Buy Stocks? At rebalancing time, readers differ on what steps to take to restore order in their portfolios.

Hartford Capital Appreciation Adds Comanagers. Plus, Federated to make changes to its equity fund lineup, Eaton Vance Atlanta Capital SMID-Cap to close to new investors, and more.

ProShares Rolls Out Merger Arbitrage ETF. Fidelity begins its long-awaited move into active ETFs, AdvisorShares files for a short-duration bond ETF, and Lee Kranefuss joins Warburg Pincus. Plus, the week's best- and worst-performing funds.

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