Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Seniors who are working on a contractual or freelance basis after retirement should take advantage of the 20% tax deduction for pass-through income under the new tax law, according to this article from Barrons. “No one is talking about what a wonderful retirement planning technique this deduction is for your affluent professionals,” says an expert with the American College of Financial Services. “Most of us don’t just retire flat out. We consult or continue to work part-time.”
A survey by TD Ameritrade has found that medical costs top the list of barriers for people who want to retire early, according to this article on personal finance website Motley Fool. Clients who want to retire before the age of 65 are advised to determine the options available to them, such as buying a health insurance policy and getting covered through a spouse's plan. Those with high-deductible health plan have the option of contributing to a health savings account, which offers triple tax benefits: tax deduction on the contributions, tax-free investment growth and tax-exempt withdrawals for qualified medical expenses.
Younger clients who are investing in a retirement account such as 401(k) are advised to stick to the buy-and-hold strategy during a market downturn, according to this article on CNBC. By doing nothing, they will be taking advantage of the low-cost environment. However, they should hold the money earmarked for near-term expenses in cash or a CD and not in the stock market because of greater risk, says a CFP.
Small businesses that are not offering retirement plans to their employees should consider opening one before the year is over, according to this article on USA Today. Having an employee retirement plan provides certain perks, such as tax deductions for the contributions. Small businesses can also have time until April of the following year to make contributions for the current year and claim the corresponding deductions. Small business employers also have the option of setting up a SEP.
