Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
Clients should weigh their options before making changes to their retirement portfolio, especially when selling target-date funds in their 401(k)s, writes a CFA at Morningstar. For example, they should avoid replacing their TDFs with annuity products that provide guaranteed income. "While annuities can play a useful role in supporting retirement spending, variable annuities are often complex and laden with fees and other provisions,” he writes. “What’s more, you could be locking in a paltry yield while paying through the nose for the comfort of the guarantee."
Generating income from retirement portfolios can be more challenging for clients than saving, writes an expert in MarketWatch. Pre-retirees who find it difficult to plan the withdrawals from their retirement assets should reduce spending, consider buying insurance and spend assets as if they were retired. They should also consider postponing retirement and making a written plan to lay out how they will spend — in the good times and the bad. Time, product and tax diversification should be included in that plan: "The use of tax diversification will give you the flexibility to diminish your annual tax liability by judiciously withdrawing funds," writes the expert.
The anxiety caused by the coronavirus should not stop clients from contributing to their 401(k)s, writes an expert in The New York Times. That's because clients will have a long time to recoup losses from the downturn. "You have years — decades! — to recover from this roller coaster ride and reap returns when the market rises again,” the expert writes. “Even if you are in your 50s or even your 60s, you are likely to spend 20 or even 30 years in retirement."
Here’s what these companies are doing to attract and retain employees.
Tapping a retirement account could be the most tax-efficient option for clients to raise the needed funds for financing a business, according to this article in Forbes. Clients can take withdrawals from a Roth IRA or borrow from their 401(k)s without facing taxes and penalties. Clients may also opt for the Rollovers as Business Start-Ups project, which are arrangements in the United States which will enable retirees to use their retirement assets tax- and penalty-free.
