Our daily roundup of retirement news your clients may be thinking about.
Seniors need to consider several factors to decide at what age they should file for Social Security retirement benefits, according to this article on Fox Business. They may delay the benefit for increased payout in the future if they have other income sources, they are healthy, or interest rates are high. Taking the Social Security benefits early may help retirees cover their debt, but it could also mean reduced benefit not only for the retirees, but also for their spouse and dependents.
Retirement investors are better off investing in real estate to generate above average income, improve overall returns, and diversify their portfolio, according to this article on Forbes. One way to invest in the real estate sector is by buying a property and renting it out for passive income. Another option is to invest in publicly-traded Real Estate Investment Trusts, which are companies that rely on real estate and pay out 90% of their gross income as dividends to shareholders to avoid federal taxes.
Clients are advised to start creating a long-term care plan while they still are mentally able to do it, according to this article on MarketWatch. To ensure that their plan will succeed, clients should simplify their investments and incorporate a retirement-income plan that aims to match after-tax income with inflation-adjusted expenses. This means that they should account for taxes and other factors to create a sustainable income flow in retirement. Income-tax planning can be complicated for retirees, as up to 85% of their Social Security benefits can be subject to tax depending on their combined income. Annuities are also a good option, although these products get different tax treatment depending on the annuity type or whether they are inside or outside a retirement plan.
Getting ready for the tax bill on retirement withdrawals helps retirees better manage their finances and reduce their tax burden, according to this article on Motley Fool. Retirees can also minimize the tax bite by making the most of medical deductions and mortgage interest deduction. Another option is to pick investments that are exempt from federal taxes, such as municipal bonds. Retirees can also enhance their tax savings by donating to charity personal items that they no longer need, as charitable donations are tax deductible.
The fall offers a chance for retirement investors to ensure that they max out contributions to their 401(k) plans and IRAs, according to this article on Money. This is also the time of the year that retirement investors should also review their portfolio to ensure that they are on track with their asset allocation goals and there are no costly loopholes and potential risks in their plan. The article offers eight moves that investors can make by year-end to improve their retirement prospects.
