Health savings accounts: Good retirement medicine
A health savings account is a good savings vehicle that clients can include in their retirement plan, according to this article on CBS Moneywatch. HSA contributions, investment growth and qualified withdrawals from the account are not subject to taxes. Clients should contribute to an HSA early to maximize these benefits. "If a family contributes approximately $6,000 per year to an HSA, compounded at 6% growth for 20 years, that's $234,000 at retirement -- a healthy account balance that can be used tax-free for any long-term care or other medical expenses," says a financial advisor.
401(k) providers charging higher fees to small businesses owners
Fees for putting up a 401(k) plan are higher for small companies than large corporations, preventing many small business owners of setting up their retirement plan for their workers, according to this article on Fox Business. “The financial services industry doesn’t want to offer those plans to small business because they can’t make a buck on it,” says an industry executive.
Income, not age, should determine your retirement date
Clients should determine their retirement age based on income instead of age, writes a financial advisor on Kiplinger. "Income is what helps give you your independence in retirement," writes the expert. "If you’re confident you have enough money coming in to cover the lifestyle you want for as long you live, you have the option to quit your job any time you like...."
Should I wait to take Social Security?
Seniors are advised to wait until their full retirement age to file for their Social Security benefit to ensure that there will be no reduction to their benefit, according to this article on Motley Fool. If they opt to delay the benefit until age 70, their benefit payments could increase to as much as 8%. However, for some seniors, collecting the retirement benefit early can be a better option, particularly if they are sick and don't expect to live longer.
Ask Larry: Did retiring at 63 lower my benefit?
A client who retired at age 63 but opted to defer her Social Security retirement benefit would receive a higher benefit rate if she had continued working with a bigger income, according to this article on Forbes. That's because Social Security computes the retirement benefit rate based on the average of the retirees' highest 35 years of work-indexed earnings.