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What it takes for a client to retire with $1M

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

The monthly number clients must invest to retire as millionaires
Three-hundred and nineteen dollars. That’s the monthly contribution clients in their 20s need to make into a 401(k) or other tax-advantaged retirement plan to end up with $1 million in retirement savings at age 67, according to a CNBC article. If clients start saving at the age of 40, that amount increases to $1,240. “As you can see, the longer you wait, the more you will have to pay,” the article says. “Do yourself a favor, and start saving early.”

Older clients should prep for natural disasters
The 2019 hurricane season is well underway and should serve as a reminder to older Americans to prepare to mitigate the risk of flooding, storms and other natural disasters, according to an article in Kiplinger’s. Seniors should have an emergency kit at the ready that includes a day’s supply of food, water and medicine. “We’re used to living a fairly comfortable life. If we have health conditions or we’re just not cut out for it emotionally, we need to think that through now and be prepared to leave,” an expert says.

Should working longer be a part of your clients’ retirement plan?
Clients may want to work longer to boost their retirement prospects, as this option allows them to delay their Social Security benefits in order to gain bigger payouts, according to Morningstar. By shortening a client’s retirement horizon this strategy will reduce the needed amount of savings to fund their golden years, the expert adds. However, this option does not work for everybody, especially for workers who are forced to retire because of layoffs or serious medical issues.

Tax-efficient funds don’t belong in clients’ IRAs
Clients should not hold their tax-efficient funds in their IRA, as they won’t maximize the tax benefits that the account provides, writes a Forbes contributor. “Investors don’t pay tax on investment growth in IRA accounts until the funds are taken out, so it doesn’t make sense to sacrifice a higher expected return in favor of tax savings, because there isn’t any tax due!” The expert continues: “All else equal, the only thing tax-efficient funds do in a retirement account is slow the growth of the account, which is certainly not the objective.”

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