8 ways clients could miss out on Social Security benefits
Many seniors miss out on a substantial portion of their Social Security benefits, as they fail to use a claiming strategy that will maximize these benefits, according to this article on Motley Fool. Clients who under-reported their income to avoid taxes will also get smaller retirement benefits than they deserve, as the benefits are based on their income. Couples can also expect lower retirement benefits if they fail to work with their spouse when crafting a claiming strategy, or they are getting a divorce after less than 10 years of marriage.
Understanding inherited IRAs and their inherent dangers
Clients who inherit IRAs from deceased loved ones should handle the assets properly, as mistakes could result in bigger tax liability and loss of tax-deferral benefits for these assets, according to this article on Kiplinger. Inherited IRAs are different from self-owned IRAs, so clients should ensure that the inherited IRAs' title is correct and prepare for required minimum distributions starting in the year after the original IRA holder's death. They should also transfer the assets to the Inherited IRA properly, follow the rules, know how to stretch the distributions, and engage in proper tax planning.
Americans retire 8 years later than workers in China—here's the retirement age around the world
Data from Aperior Care show that an Average American worker retires when reaching the age of 63, and the average retirement rate is increasing in other countries, according to this article on CNBC. "Pretty much every country [is raising the retirement age]. Definitely every country in the developed world," says an expert. "And the reason is the same as in the U.S.: people are getting healthier, they live longer. Therefore, they need to be supported for a longer period and at some point, that just becomes unsustainable."
Is your target-date retirement fund putting you at risk?
Although target-date funds are designed to allow investors to reduce exposure to stocks as they approach retirement, pre-retirees who hold TDFs in their portfolio are advised to check these investments, writes an investment advisor on Chicago Tribune. That's because these funds could hold more stocks than they should even the investors reach their retirement age, putting them at "the risk of sequence of returns," writes the expert.
Opinion: Social Security needs more money or benefits will be cut
Based on the 2017 Social Security Trustees Report, the program would face a shortfall equal to 2.83% of payroll over the next 75 years, with its trust fund to dry up in the 2030s, writes Alicia H. Munnell, director of the Center for Retirement Research at Boston College, on MarketWatch. "The exhaustion of the trust fund does not mean that Social Security is 'bankrupt,'” writes Munnell. "Payroll tax revenues keep rolling in and can cover about 75% of currently legislated benefits over the remainder of the projection period. Relying on only current tax revenues, however, means that the replacement rate — benefits relative to pre-retirement earnings — will drop to a level not seen since the 1950s."