© 2019 SourceMedia. All rights reserved.

Clients planning for retirement are underestimating their spending

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

Clients planning for retirement are underestimating their spending
Clients are likely to live longer and need bigger savings to cover a longer retirement horizon than they estimate, according to Matt Helfrich of Waldron Private Wealth. To ensure the have enough retirement savings, they should save for business-subsidized costs, overlooked expenses, healthcare and non-recurring events. “It might take some lengthy and tough discussions with your advisor, but building and adhering to a budget that accounts for these types of expenses will create long-term security in retirement,” Helfrich writes in Kiplinger.

Retiree spending new chart

The 401(k) retirement is coming — are clients prepared?
A survey commissioned by Wells Fargo has found that fewer younger adults than baby boomers and Gen Xers expect to rely mainly on Social Security for retirement income, according to this MarketWatch article. More than 70% of retirees claimed that they had “no idea what [they] would do without Social Security in retirement if it wasn’t there,” the survey found. Some financial experts want their clients not to make Social Security benefits a part of their retirement plan, as this strategy will enable them to set aside more money.

7 reasons to use a Roth IRA for early retirement
Contributing to a Roth IRA can be a smart saving strategy for clients who are planning to retire early, according to this article in U.S. News & World Report. “By saving in a Roth IRA now, your money is growing tax-free and will be taken out tax-free, meaning you will only have to withdraw what you need to fund your retirement,” says advisor Tony Drake of Drake & Associates.

Narrowly focused investment strategies are a recipe for “feast or famine,” an analyst says.
September 11

How clients can make required minimum distributions pain free
Retirees should not expect a big difference in their 2019 RMDs just because of the stock market’s “rocky close” last year, according to this CNBC article. They are advised to get their paperwork in order, double-check their calculation and ensure that they will comply with the aggregation rule if they hold multiple IRAs. Retirees also should have a tax strategy and may opt for a qualified charitable distribution to avoid paying taxes on their RMD. “That’s a great way to give to charity, especially since the new law passed where most people don’t get the tax deductions anymore for their charitable contributions,” says tax expert Ed Slott.

For reprint and licensing requests for this article, click here.