A financial planner says that the best Social Security claiming strategy for a pre-retiree couple depends on their personal and unique circumstances, according to this article on MarketWatch. The couple needs to account for their health and longevity, says the expert, adding that "closely linked are questions that focus on the state of your personal finances, your willingness and or ability to work, and the amount of other assets or sources of income that you might have to supplement your income in retirement." Moreover, "the amount of your own retirement benefit, and the amount of possible spousal and or retirement benefits that you may be entitled to factor into the equation."
Couples who want a divorce are advised to avoid tapping into their 401(k) or IRA to cover the legal fees and other related expenses, according to this article on personal finance website Motley Fool. That's because taking a distribution from the retirement account could trigger a tax bill plus a 10% early withdrawal penalty. Dividing assets can also be complicated especially if couples have retirement accounts with different tax treatments such as 401(k) and Roth IRA. A third-party mediation or legal advice is recommended to ensure that both parties their equal share of the savings.
Non-spouse beneficiaries of an inherited IRA have the option to withdraw all the money within five years, according to this article on Kiplinger. Another option for them is to take periodic payments starting December 31 of the year after the year of the original IRA owner's death. Young beneficiaries are usually better off opting for periodic payments, as it will give the account more time to grow tax-deferred. Beneficiaries should also understand that distributions are subject to taxes, except for the nondeductible portion of the withdrawals.
A health savings account is a good place for workers in their 50s to start saving for their out-of-pocket medical expenses in the future, according to this article on Forbes. An HSA is funded with pre-tax money, offers tax-deferred growth on savings, and provides tax-free withdrawals for qualified medical expenses.
Workers who switch jobs may be better off leaving their old 401(k) assets with their former employer instead of rolling the money over into their new plan or an IRA, writes a wealth manager on The Wall Street Journal. "To make an informed decision, you should compare your current 401(k) with your rollover options, looking at fees, the quality of investment options, quality of service providers and how these options fit into your long-term financial planning and investment goals," writes the expert. However, "when the reasons and costs are transparently laid out, for most of us it usually does make more sense to rollover the funds into an IRA as that provides consolidation, more choices and lower investment fees."
