Our daily roundup of retirement news your clients may be thinking about.
Retirement investors should make the most of their 401(k) plan, including their employer's matching contribution to enhance their tax savings, according to this article on Forbes. They can also save on taxes by contributing to a health savings account and a traditional or Roth IRA. Clients may also opt for whole life insurance, which offers tax-deferred growth on premiums, or a home, which they can sell with up to $250,000 (or $500,000 for couples) in capital gains tax exclusion.
A report from the Pension Benefit Guaranty Corporation shows that more than a million union workers are likely to discontinue receiving their monthly pension benefits, according to this article on The Wall Street Journal. That's because pension plans are dwindling and would have a shortfall of $80 billion by 2026. “It’s more likely than not that we will be insolvent,” says an executive with PBGC.
An analysis of data about household investing patters from the Federal Reserve has found that the average household beat a diversified hedge fund index, according to this article on MarketWatch. The findings suggest a decrease in debt levels since 2008 and an increase in retirement savings and deposits. However, the results might be hiding some bothersome trends, such as high household allocation to stocks.
Portugal's Algarve region, Valletta, Malta, Mazatlan, Mexico, and Abruzzo, Italy, top the list of retiree-friendly places for this year based on CNBC's annual Overseas Retirement Index. The ranking is based on 13 criteria that include cost of living, taxes, crime and safety, and health care. Entertainment, environmental conditions, expat community, English language proficiency, infrastructure, recreation, and residency options were also considered in the ranking.
Clients should focus more on how they can boost their retirement savings rate than on the potential returns they can get from their investments, writes an expert on Yahoo Finance. "The best investment you can make is often saving more money," writes the expert. "We can’t control what returns financial assets will have going forward but we can control how much money we set aside. With life spans, and thus investor time horizons, expanding, saving money for long periods of time to allow compound interest to do the heavy lifting for you will be more important than ever."
