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A $1,000 emergency would push many Americans into debt

Our daily roundup of retirement news your clients may be thinking about.

A $1,000 emergency would push many Americans into debt
Many Americans affected by the partial government shutdown are tapping their retirement savings and taking other financial options, as they do not have emergency funds to cover the shortfall, according to this article on CNBC. To avoid similar hurdles in the future, clients should ensure that they set up a fund for emergency expenses. "It is like an umbrella to cover us up when the rain arrives unexpectedly. It is better to be prepared than get wet and perhaps sick," says an expert.

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A demonstrator holds a "Stop The Shutdown" sign during a rally with union members and federal employees to end the partial government shutdown outside the White House in Washington, D.C., U.S., on Thursday, Jan. 10, 2019. The partial government shutdown entered its 20th day today as its impact is more widely felt with about 800,000 federal workers who will miss their paychecks on Friday. Photographer: Andrew Harrer/Bloomberg

Is phased retirement a good fit for you?
Companies should consider offering their older workers the option of taking a phased retirement to enable them to transition to the golden years, according to this article on U.S. News & World Report. This option will also allow employers to retain talent at the same time. “Phasing into retirement can be a wonderful way to move into the next chapter of your life gracefully while still enjoying the rewards and benefits of working,” says a financial advisor.

The rise of gray divorce: Why and why not?
The divorce rate is increasing for older couples, with one out of every four Americans getting a divorce within the 50-older age group, according to this article on Kiplinger, citing a study by sociologists. The trend can be attributed to the disappearing stigma of divorce, increased longevity and the economic gains that today's women have achieved. “Many no longer have to choose between a bad marriage and poverty,” says an expert.

How to make a 401(k) withdrawal and avoid penalties
The IRS imposes a 10% penalty on early withdrawals from 401(k)s to discourage workers from tapping their savings prematurely, according to this article on personal finance website Motley Fool. However, 401(k) participants can withdraw funds from the plan early without triggering the penalty. To do this, they should use the money to cover medical expenses, roll the funds to another retirement account, or secure a court order for the withdrawal. The early 401(k) withdrawal penalty also does not apply to workers who become permanently disabled or separated from their employer at age 55 or older.

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