Our daily roundup of retirement news your clients may be thinking about.
Clients should understand how Social Security works, as it is a "foundational piece" in their retirement income plan and has a major impact on their financial security in the future, writes a certified financial planner for Kiplinger. "Hundreds of claiming strategies exist that factor in your age, your marital status and spouse’s age, and which spouse is or was the higher earner," writes the expert. "You’ll also have to consider how your Social Security income will affect your income taxes."
Pension consultants say that more employers are poised to transfer the responsibility of paying retirees to insurers, as corporate pensions have reached the highest funded level since the financial downturn, according to this article on The Wall Street Journal. Being in a higher funded level “makes transferring the risk more affordable,” says an analyst. “A plan sponsor that’s only 80% funded is going to have to put in more money than one that’s better funded.”
The home and retirement accounts are the two most important assets for couples who are heading for divorce, according to this article on U.S. News & World Report. Because of the new tax law, alimony is no longer tax deductible for the party making the payment and the recipient is not required to report the money as part of taxable income. Spouses should consider taxes when seeking a share from retirement and investment accounts. "If I ask if you would rather have $1 million in cash or $1.5 in a brokerage account, you'd say, ‘I’d rather have $1.5 million.’ But if there are embedded capital gains, the real value could be $800,000," says an expert.
Seniors should consider collecting Social Security retirement benefits as soon as they turn 62 if some members of their family are waiting to file for a benefit on their record, according to this article on personal finance website Motley Fool. Claiming early is also a good option for seniors who want to boost their survivor benefits on their predeceased spouse's record. Those who are entitled to public pension benefits at a later age should consider filing for Social Security early to avoid a reduction in the benefits as a result of the Windfall Elimination Provision.
Insufficient savings, inability to pursue individual passions and isolation are among the pitfalls that clients should avoid in retirement, writes an expert on MarketWatch. Waiting for milestones and feeling inadequate and less confident are other traps that seniors should work to get rid of, adds the expert. "I believe that those who understand the circumstances, situations and events they may encounter in retirement have a better chance of avoiding the snags and of feeling fulfilled in the third chapter of their life."
