Our daily roundup of retirement news your clients may be thinking about.
The sharing economy attracts older adults
Seven percent of Americans claim they participate in the sharing economy, with 25% of respondents older than 55 saying they are providers in the new trend, according to a report from PricewaterhouseCoopers. The sharing economy could grow from about $15 billion last year to $335 billion by 2025 based on another report from the firm. “The assets that older people accumulated and used intensively when first purchased (a large home because they had children) come to have excess capacity over time (the children move out and the car is not needed for so many errands),” according to Linda Barrington, executive director of Cornell University's Institute for Compensation Studies in the Industrial and Labor Relations School. --The New York Times
Two big reasons clients need more retirement savings
People will need to save more for retirement since their health care costs and long-term care expenses will not be completely covered by Medicare, according to this article on Forbes. To have an adequate nest egg, clients are advised to estimate their health care costs based on their health conditions instead of relying on average figures. They also need to understand Medicare coverage, take full advantage of their health savings account and discuss long-term care plans with their children. --Forbes
How millennials should save for retirement
Millennials will need to set aside between 4% and 9% of their pretax income for retirement to ensure they will have adequate savings to cover their expenses in their golden years, according to a report from J.P. Morgan Asset Management. A study by T. Rowe Price found that millennials' average default contribution rate is only 3%. "The 3% default rate that a lot of employers use is simply inadequate. People should be saving at a much higher rate," said J.P. Morgan's Katherine Roy. --USA Today
Make a plan before required minimum distributions kick in
Retirees need to have plan for their required minimum distributions from their retirement plans before the year in which they reach 70 ½, according to this article on MarketWatch. An RMD is computed according to the end-account balance in the previous year and their age at the end of the year. While clients are allowed to delay their first RMD until April 1 of the following year, they should reconsider if such a move pushes them to a higher tax bracket. --MarketWatch
Financial planning is beyond investments, retirement plans
Clients regardless of age need to have a financial plan, which is not limited to investments and retirement savings, according to this article on CNBC. Financial planning is not age-specific, as there are various aspects to consider, such as their spending and disability, which change as clients age, advisors say. Clients are better off starting saving for retirement as early as they can and take advantage of their employer's match contributions to their retirement plans. --CNBC
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