Can the government help you save for retirement?

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

Can the government help you save for retirement?
Lawmakers this year are expected to pursue measures that will help Americans enhance their retirement prospects, according to this article on The Wall Street Journal. For example, more states are poised to establish state-run retirement programs for workers who have no access to a 401(k) or similar plan. Lawmakers are also considering a bill that would offer incentives to employers that raise the standard minimum default contribution rate in their retirement plan from 3% to 6%. “Members of Congress are hearing from constituents that retirement security is a major public-policy issue they are confronting in their lives,” says an expert.

Why you shouldn't take a 401(k) loan
Workers are advised against borrowing from their 401(k) plans, as it could force them to forfeit some of their employer’s matching contributions, according to this article on Forbes. They would also default on the loan when they change jobs, meaning the loan will be subject to income taxes as well as early withdrawal tax penalties. A 401(k) loan also presents opportunity costs, while borrowers will get no tax deduction on interest payments and even face double taxation on the loan interest.

How to set up guaranteed lifetime income
Financial advisors tell their clients to include guaranteed income sources in their retirement plan to ensure that they can cover essential expenses in the golden years, according to this article on U.S. News & World Report. While many advisers recommend annuities to create a source of guaranteed income, other advisers prefer alternatives, such as municipal bonds and Treasury’s. That’s because annuities can be very costly and these financial products are not adjusted to inflation.

4 expenses that can eat into your retirement savings
Clients who want to secure their retirement are advised to save enough to cover the cost of health care, which is expected to increase in the golden years, according to this article on personal finance website Motley Fool. They should also ensure that they prepare financially for their housing and transportation expenses. Spending on travel and recreation is also likely to increase in retirement, so clients should account for these expenses.

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