Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Some 63% of younger Americans polled by the Longevity Project and Morning Consult believe that they will live longer than their parents, with 70% of Gen Z members saying they will have a longer lifespan than their elders, according to this article in CNBC. The survey also found that 48% of younger Americans feel they are not saving enough to secure their retirement, while 50% think they are not ready to plan for their retirement. Social Security is expected to be the main source of retirement income across all generations. “While 83% of baby boomers expect to have some income from Social Security, that drops to 64% for Generation X,” according to the article. “Meanwhile, just 42% of millennials and 38% of Gen Z plan to depend on those benefits.”
Couples who are getting a divorce are advised to avoid tapping their 401(k)s and IRAs in order to cover their legal bills and increasing expenses, a CFP in Kiplinger writes. "Direct withdrawals from a 401(k) or IRA can be financially disastrous," according to the CFP. "Retirement savings are meant to remain in place until you reach retirement age, and the government has put in a tax system that penalizes those who raid their accounts early."
Workers may be better off setting automatic contributions to retirement accounts than taking a hands-on approach to saving, according to this article in Motley Fool. That's because putting contributions on autopilot will enable them to save on a regular basis. It will also make it easier for clients to include retirement savings in their budget.
Clients who want to improve their retirement security may consider creating a source of tax-free income, according to this article in Forbes. This means taking advantage of the Roth feature of their 401(k)s or contributing to a Roth IRA. Another instrument to build tax-free retirement income is to buy life insurance, which offers various benefits, including tax deferral, ready access to cash and long-term care coverage.
These employers offer plans that pay as much as $6.52 per hour in contributions.
Valuation models show that investors cannot depend on the stock market to generate the needed returns to secure their retirement, writes a MarketWatch contributor. "You therefore might want to consider adjusting your retirement financial plan to include lower projected equity returns," he concludes. "If you’re wrong, you’ll be pleasantly surprised, and that’s a far better outcome than being too optimistic and discovering that you have run out of money."
