Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Retirees must determine the type of retirement accounts that have RMDs, according to this Yahoo Finance article. After making this determination, clients are then advise to date when they should begin withdrawals, as well as the amount of money they need to pull from those accounts in order to avoid an IRS penalty of 50% tax on the amount not withdrawn in time. Along with other decisions, these would help them in retirement planning and spending.
Clients are advised to watch out for taxes, long-term care costs and boredom as these three obstacles may eat up precious retirement savings, according to a Motley Fool article. Retirees must read up on what types of income are taxable plus if their Social Security benefit will be taxed by their state. An estimated 70% of Americans aged 65 and up will require some type of long-term care. They must also budget for extra entertainment or activities as boredom may eventually happen for someone who used to have a full-time job.
Workers are advised to take advantage of a Roth IRA, as this account will benefit clients from all income groups, according to this article from CNBC. They are allowed to fund a Roth while contributing to a 401(k), while their retirement plans may also offer a Roth feature. Seniors are also allowed to continue contributing to a Roth even past the age of 70 1/2. Roth distributions are also tax-free, and this will help retirees to reduce their taxable income and keep their Medicare premiums low.
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There are a few considerations that women need to make before deciding when to start collecting their Social Security retirement benefits, according to this MarketWatch article. Those who are still working may expect Social Security to withhold a portion or all of the benefits if their wage income exceeds the earnings limit. Women also need to determine their Medicare premiums, as Social Security is expected to deduct the amount from their benefit payments. A certain portion of their retirement benefits will also be subject to taxation if their combined income exceeds a certain threshold.
