Why a personal matching program is a better gift than an inheritance

Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

Clients should give their children this instead of an inheritance
Parents can help their children secure retirement more by creating a personal matching program instead of simply leaving them an inheritance, writes an expert in Forbes. This means that parents will match their children’s savings in a Roth IRA dollar-for-dollar on the condition that they agree not to dip into the accounts until they retire, the expert says. “It also happens to avoid a gift tax obligation (the parents’ match is a gift).”

Retirees are advised to tap into their Roth accounts last to minimize hefty tax bills associated with 401(k) distributions.

Retirement risk factors clients should consider
Market volatility is one of the major risk factors that clients are advised to account for when planning and saving for retirement, an expert says in this Morningstar article. To mitigate this risk, retired clients should ensure they have the proper asset allocation, diversify their portfolio and develop a dynamic spending strategy that will allow them to curb spending during volatile markets, she says. Clients should also account for the cost of health care, and buying the appropriate insurance coverage is the way to prepare for this risk.

7 mistakes that can ruin your client’s retirement
Failing to create a comprehensive retirement plan is one of the biggest mistakes clients are advised to avoid to secure their post-career life, according to this article in MarketWatch. Clients also should not rely too much on the stock market's strong performance or allow their emotions to affect their investment decisions, according to the article. Retired clients are advised to keep track of their expenses and costs, including capital gains taxes, and they should not panic when the market slows down nor confuse an investment with a speculation.

“There’s less performance chasing than you saw in the past, and that’s a positive thing,” an expert says.

December 4

Clients can be creative when withdrawing from retirement accounts
Seniors who are 70 1/2 and older are compelled to take RMDs from their tax-deferred retirement accounts, and the withdrawals could boost their tax bill, writes a CFP in Idaho Business Journal. Retirees who have no need for the RMD have the option of giving some of the money to their adult children or using the funds to pay for their grandchildren’s college costs and get a tax deduction, he writes. Retirees can also donate the RMD directly to charity and avoid taxes on the withdrawals.

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Retirement planning Risk management Portfolio diversity Risk tolerance Roth IRAs
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