Daily life in retirement is less costly than clients think
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
How retired clients spend their time, hour by hour
Planning their daily routine in retirement could be less complicated than most clients think, writes a Wall Street Journal columnist. In fact, most of what they will do as retirees are found in their current daily chores. "[T]he average day in retirement involves a fair amount of puttering," which "typically doesn't cost a lot of money," the columnist writes. It is good news for clients who are worried about burning through their savings.
Do clients know how much their health care will cost in retirement?
The average client should plan on spending $4,300 on out-of-pocket healthcare expenses each year, according to Boston College research cited in this Motley Fool article. Their deductibles and premiums will vary depending on their choice of a traditional Medicare plan or one of many Medicare Advantage plans. Clients should be aware this estimate does not include long-term care expenses, which require a separate insurance policy, the article says.
The magic number for retirement savings, according to clients
$1.7 million is the amount clients need to retire, the average respondent said in a Charles Schwab survey reported on by CNBC. By their own math, clients are far behind on their savings goals, with more than half saying they set aside 10% of less of their income in 401(k) plans. Yet two-thirds believe they will "live comfortably throughout retirement," according to an Employee Benefit Research Institute study cited by the article.
Options for clients after maxing out their 401(k)
Clients with maxed-out 401(k) plans can invest extra money in any number of tax-advantaged vehicles, according to this U.S. News & World Report article. Investments Opportunity Zones receive as much as a 15% cut in capital gains taxes; contributions to health savings accounts are tax-deductible while gains and distributions are tax-free. Distributions from 529 college savings plan are also tax-free, according to the article.