© 2020 Arizent. All rights reserved.

Should clients sell anything in their 401(k)?

Using ETFs, active managers have still been able to participate in the 10% rally since Donald Trump's election. Meanwhile, the growing heft of the funds has made them a key component of U.S. exchanges.
Register now

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

Should clients sell anything in their 401(k)?
Clients should think twice before selling stocks held in their 401(k)s amid the current bear market, writes a CFP for Morningstar. That's because a market plunge is normal, and stocks are likely to recover from the downturn and earn a positive return over the long term, she writes. "If you stop contributing to your 401(k) during downturns, you’re not buying stocks when they’re cheap."

Retirement tips in a coronavirus stock market
Clients will be better off doing a Roth IRA conversion to stay the course in achieving their long-term financial goals during this coronavirus-driven market downturn, according to this article in TheStreet. Before converting traditional assets into a Roth, clients need to know the extent that they can delay the withdrawal of the funds and determine whether they have non-retirement money to cover the tax bill it would entail. “When discussing tax breakeven considerations, we remind investors that future tax law is uncertain but a Roth IRA conversion insulates them from future increases in tax rates,” an expert says.

How retirees should manage the market downturn
A market downturn could mean hefty losses and lower returns for investors — a nightmare for those who are approaching retirement, according to this article in Kiplinger. To weather a low-return environment, investors should improve their cash flow by reducing spending and raising their contributions to tax-deferred retirement accounts. They should also consider working longer, maintaining a globally diversified portfolio and transferring risk by annuitizing some of their savings.

First, prove you’re listening; then make sure they know you’re taking action to protect their portfolios.
March 17

How long do clients have to work to qualify for Social Security benefits?
Workers have to earn 40 work credits to qualify for Social Security retirement benefits, according to this article in Motley Fool. This means they have to work for at least 10 years, as they can earn four credits per year, regardless of salary. Clients that work less than 35 years are likely to receive reduced benefits; however, there is a Social Security minimum benefit to ensure most retirees get at least enough money to stay out of poverty.

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