Our daily roundup of retirement news your clients may be thinking about.
This article on USA Today offers investment strategies for 401(k) participants in an aging bull market. "Normally in a bull's later stages, economic growth and inflation pick up steam, the news about stocks is positive and the Federal Reserve is in the beginning stages of cooling growth with interest rate hikes," states the article. "In this environment some types of investments work better than others."
An analyst says that a 10-year yield going above 3% could boost company shares and fix their underfunded pension plans, according to this article on MarketWatch. “We believe investors will benefit by focusing on companies that benefit, or are positively leveraged to higher interest rates, says the expert. "A somewhat less intuitive example are those companies with deficits in their pension obligations.”
Taxpayers have until April 17 to make 2017 contributions to their Roth IRA, according to this article on Kiplinger. Contributions are capped at $5,500 for clients who are below the age of 50, while those who are older can contribute up to $5,500 plus a catch-up of $1,000. Unlike a traditional IRA, a Roth IRA offers no upfront tax deduction but distributions in retirement will not be subject to taxes.
Social Security have various requirements for workers to claim disability benefits, and the computation is pretty much the same as for determining retirement benefits, according to this article on Motley Fool. The disability benefit is based on the worker's employment history and average indexed monthly earnings. The benefit is computed by add 90% of the first $895, 32% of the amount between $895 and $5,397, and 15% of the amount in excess of $5,397.
Investors may be better off parking their index funds outside of their 401(k), according to this article on CNBC. That's because their plan could make these investment options appear to be more costly than their actual value. They are advised to compare the plan's fee disclosure with the cost of investing in these funds directly with the manager, says an expert. "Take a look and say, 'Are you getting a fair price?' And oftentimes you'll find there's additional layers, broker compensation and other commissions. They're really eroding your returns."
