Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Clients who consider contributing to their health savings accounts past their full retirement age are advised to rethink their plan, as they may no longer be allowed to do it once they start collecting their Social Security benefits and become a Medicare beneficiary, according to this article on CNBC. Those who delay their retirement benefits may opt for a lump sum in retroactive benefits of six months. “The problem is that if you take the lump sum from Social Security, it triggers Medicare Part A being effective retroactively as well. So if you made contributions to an HSA during that time, you face an excise tax of 6% on those contributions in addition to income taxes,” says a CFP.
A report from the Center for Retirement Research shows that 37% of seniors were forced to retire earlier than planned, according to this article on USA Today. They had to stop working because of poor health, employment issues and family problems. An early retirement could hurt seniors' financial prospects, as they would have to retire with smaller savings. To avoid this scenario, workers are advised to remain fit and healthy and save aggressively as if they plan to retire at a younger age.
Lawmakers are working on several proposals aimed at encouraging more Americans to build their retirement nest egg, according to this article on MarketWatch. The Senate is considering the "Retirement Security and Savings Act," while the House is poised to vote on two bills that would enable workers to save more for retirement. “The retirement savings system that we have is actually very good but it can be improved. All of these ideas are ideas to build upon the system we have,” says an expert with financial services firm T. Rowe Price.
Seniors who consider working longer are advised to have a backup plan, as they are likely to retire earlier than planned, according to this article on The New York Times. Many older workers are forced to leave the workplace for good because of health issues and layoffs. The number of older workers has been increasing, but these workers are mostly the educated ones. “Participation rates have increased about three times as fast for college grads than high school dropouts mainly because college grads tend to be healthier, they don’t usually work at physically demanding jobs, and employers value them,” says an expert.
