Our daily roundup of retirement news your clients may be thinking about.
Although proceeds from life insurance are not subject to income tax, the IRS will impose estate tax when the policy owners die and the assets are transferred to the beneficiaries, writes an expert on Kiplinger. To avoid this, clients should consider an irrevocable life insurance trust and name it as the owner of their life insurance, advises the expert. "Upon your death, the proceeds from your life insurance will pass on to your heirs not only income tax-free but estate tax-free as well."
A report from a group of U.S. researchers shows that the rate of seniors filing for bankruptcy has doubled, according to this article on personal finance website Motley Fool. Citing data from the Consumer Bankruptcy Project, there was more than a two-fold increase in the rate at which older Americans [age 65 and over] file for bankruptcy and an almost five-fold increase in the percentage of older people in the U.S. bankruptcy system,” according to the article.The trend could be attributed partly to hefty medical expenses, based on a survey conducted for the report.
There have been moves seeking to scrap or reduce pension benefits, pushing 403(b) plan to become the main source of retirement income for employees of public schools and non-profit organizations, according to this article from Forbes. When computing for the amount of retirement income that these workers should generate from their 403(b)s, they should determine the amount they will need to cover their expenses per year and identify other sources of retirement income, such as pension and Social Security. The difference between the needed amount for their annual living costs and the income from all possible sources will be the amount that they 403(b)s should cover.
An expert says that seniors who consider moving abroad in retirement and buying a real estate property are advised to account for a number of considerations before making a decision, according to this Q&A article on Morningstar. For example, they should determine whether the country they plan to relocate to is really interested in accommodating them. Some countries are limiting the number of foreigners and impose taxes on those who qualify, says the expert. "The amount of extra cash, extra fees, extra taxes that you will have to pay for could be significant."
