6 ways advisors are guiding prospective retirees

August 26, 2022 2:08 PM

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High inflation and market uncertainty are taking a toll on the population in general and on retirees in particular, who are becoming increasingly less confident about their futures. But all is not lost.

From strategies on creating lifetime income and unlocking real estate wealth to reviving hedged and tactical investment approaches and delaying claiming Social Security benefits, here are six ways advisors are helping their clients navigate the road to retirement.

Advisors in conversation: Creating lifetime income in retirement

A recent survey by the Employee Benefit Research Institute indicates that workers are feeling less confident about their retirement today than they did one year ago, a reflection of their concerns about the current economic environment.

In such times, plan sponsors and participants can gain reassurance from the experience and knowledge of leading experts in the retirement field, such as Ted Benna, who developed the first 401(k) plan, and Mindy Zatto, co-founder and principal at Strategic Benefits Advisors.

With decades of experiences between them, Benna and Zatto share their insights and perspectives on how employers should shape their retirement plan offerings, why employees should start saving early and more.

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Advisors in conversation: Creating lifetime income in retirement

Unlocking real estate wealth for investors nearing retirement

Real estate has proved to be a sound proposition for many investors, with more than $6.5 trillion estimated to be tucked away in investment properties in the U.S.

But without the same focus that wealth management provides for more traditional investments such as stocks and bonds, investors may inadvertently find their real estate equity not just tucked away, but locked away — stranded without a strategy to maintain value or generate passive income.

"In transitioning from building wealth to harvesting it, individuals run the risk of undermining their plans for the future," said Rob Johnson at investment property wealth management firm Realized. "So it behooves individuals to work with their CPAs and advisors to take a closer look at their options."

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Unlocking real estate wealth for investors nearing retirement

Capitol Hill Generics Before 112th Session Of Congress Begins

Andrew Harrer/Bloomberg

5 ways ‘SECURE 2.0’ legislation could change retirement savings

If there's one thing that everyone can agree on, it's the importance of saving for retirement, and Congress is keen to help with new legislation.

The proposed SECURE 2.0 bill will combine the provisions of the EARN (Enhance Americans Retirement Now) Act and the RISE & SHINE (Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg) Act.

Bipartisan support is strong, but some experts believe this weakens the bill. "They trim around the edges," said retirement specialist Ed Slott. "Everybody likes retirement and apple pie… If they're supporting it, it means there's nothing earth-shaking here. If there was, there'd be somebody who's against it."

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5 ways 'SECURE 2.0' legislation could change retirement savings

These unconventional strategies may help inflation-besieged clients in the retirement zone

Conventional wisdom dictates that the closer someone is to retirement, the more conservative their investments should be. Historically, bonds have provided the stability and security prospective retirees crave, but more recently bond declines have outpaced those of stocks, sparking concern about predictable income.

With inflation running higher than it has been for years and prospective retirees looking to protect their investments from the current uncertainty and risk in both stock and bond markets, it may be time to dust off hedged and tactical strategies not seen since the 2007-08 financial crisis.

Utilizing strategies that — instead of abandoning stocks and bonds — make shifts to investments to address falling markets may be unconventional, but could make sense for investors approaching retirement and help them manage inflation, safeguard their investments and maintain their purchasing power, says Eben Burr, president of Toews Asset Management.

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These unconventional strategies may help inflation-besieged clients in the retirement zone

How advisors can help clients get early retirement account distributions—without paying a penalty

The tax advantages of IRAs, Roth IRAs, 401(k)s and other retirement savings plans are well known, as is the fact that there are early distribution penalties, typically 10%, on the pre-tax portion of any withdrawal before the age of 59 ½.

On occasion, investors may have a legitimate need to access their retirement savings and can do so without incurring a penalty under certain exceptions listed in the Internal Revenue Code, which are narrowly applied and require taxpayers to meet strict stipulations.

Modifications to the exceptions, unveiled by the IRS in August, update the maximum interest rates and lifetime expectancy tables used to calculate distribution schedules, allowing investors early access to their retirement funds via updated options that could help them avoid a penalty.

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How advisors can help clients get early retirement account distributions—without paying a penalty

Getting clients comfortable delaying Social Security with reversible delays

Prospective retirees with a wide range of investments may not consider Social Security benefits as a crucial part of their future plans. Nonetheless, people nearing the end of work life are still keen to maximize the income they receive.

It is generally accepted that delaying taking Social Security benefits until after reaching full retirement age at 67 years old will increase the amount of future income. Still, irrational fears frequently prompt individuals to start claiming earlier than they ideally should.

The decision to delay is often cast as a daunting, all-or-nothing choice. But by using a "six-month nudge" strategy to reframe things as a short-term, reversible option, not a permanent, irrevocable decision, advisors can help individuals who would benefit from a later start date.

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Getting clients comfortable delaying Social Security with reversible delays