Our daily roundup of retirement news your clients may be thinking about.
Many seniors are carrying a bigger debt burden into retirement, according to this article on Nasdaq. The article cited stats from the Federal Reserve Bank of New York that shows per-capita debt among 65-year-olds increasing by 48% between 2003 and 2015. They are advised to evaluate their debts to curb the impact of their loans on their nest egg by checking the interest rate and tax treatment of their loans, as well as the reason why they incurred the debt. "Once you've evaluated your debts, you can identify which balances need to be paid down first, or whether it's better to invest your money instead," states the article.
Retirees are advised to assess their tax situation this mid-year, as their liability may change under the new tax law, according to this article from Kiplinger. Some of them may see a drop in their tax bill, while others may owe more this year because of the tax changes. “This is a year where people can be caught off-guard if not looking ahead at what their 2018 tax liability is,” says an expert.
Clients who opt for the standard deduction cannot claim their charitable tax deductions, which they can get by itemizing deduction, according to this Q-and-A article from Los Angeles Times. Separately, although early retirees may opt to buy health insurance from the Affordable Care Act exchange before they qualify for Medicare, many financial planners urge seniors to continue working to ensure that they have the coverage. That's because they cannot rely on the exchange in the future as it faces uncertainty.
Clients who want to simplify their IRA portfolio may want to switch to a target-date retirement fund, according to this article on CNNMoney. This investment option will enable them to diversify portfolio appropriately for various phases of retirement using a single fund. Another option is to get a robo-advisor, which will enable clients to rebalance their investments and help boost after-tax returns from taxable accounts through tax-loss harvesting.
An analysis by The Senior Citizens League has found that the purchasing power of Social Security benefits has dropped by 34% since 2000, according to this article on personal finance website Motley Fool. Despite a 2% increase in the benefits this year, the hold harmless provision resulted in a reduction, a 5% increase, or no changes in the benefits of 50% of the benefits, the study found.
