Our daily roundup of retirement news your clients may be thinking about.
The Trump administration's tax cuts and other policies have stirred strong economic performance, but these results could mean that financial markets are vulnerable in the foreseeable future, according to this article from USA Today. The article says that 401(k) investors should consider bracing up for the possibility. “The stock market is relentless in asking the question, 'What's next?' says one market observer. There is a fear that ... while things are great right now, it's as good as it gets,” he said. Indeed, rising skepticism about whether current trends can last is one of the reasons why the S&P 500 is up just 7.4% this year even though earnings for the large-company stocks in the index are up 25% in the second quarter, notes another expert. "The fact that the economy is at the ‘peak of everything’ is a good sign that soon we could be looking down the slope," says an analyst.
House lawmakers filed a bill that would extend the cuts to individual tax rates beyond 2025, according to this article on The Wall Street Journal. The legislation also includes provisions that would enable small companies to band together to offer multiple-employer plans, 401(k)-type retirement plans as a way to reduce administrative costs as well as fees. Workers who have an annuity in a 401(k)-type plan would also be allowed to move the contract to an IRA without incurring any taxes.
Experts say that recovery from the financial crisis differs among retirement savers, with those doing well before the downturn recouping their losses faster and better than the others, according to this article on CNBC. The low-yield environment pushed many retirees to opt for foreign stocks, real estate investment trusts and other nontraditional investments to improve returns, says an expert. However, clients should watch out for the tax consequences of these investments, warns the expert.
A new study has found that 37% of Americans lacked confidence that they would be able to save enough for retirement, according to this article on Fox Business, citing research from personal finance website NerdWallet. Some 32% of the respondents voiced confidence they will be able to amass adequate savings by the time they retire. And 48% of Americans don't believe that they will be able to save $1 million, with only 27% saying they can, the study found.
Seniors are advised to create a budget if they intend to make big-ticket expenses in retirement without hurting their financial prospects, writes a certified financial planner on Kiplinger. This includes the amount that they need to withdraw from their portfolio plus taxes, writes the expert. They are advised to give themselves more time to save and prepare for an expensive budget item and opt to pay the expense in cash to avoid debt.
