Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Health savings accounts can be a great retirement savings vehicle, however they are underutilized because of many workers’ misunderstanding about the account, according to a report from Bank of America in this Barron’s article. An HSA offers triple tax benefits, allowing clients to save for the rising cost of health care in retirement. Projected medical costs for retirees has increased 23% over the past four years, while an average 65-year-old couple would need $296,000 to cover out-of-pocket expenses in retirement, the report adds.
Clients who underestimate their life span stand to face financial troubles in retirement, according to this Motley Fool. To avoid outliving their savings, they should check their health status and their family history. They should plan for a longer retirement horizon if they are very healthy and have no health issues. It is safer for clients to save more than the needed amount, as they could still spend the money away in their final years.
Three cities in California and two urban centers in Florida lead the GOBankingRates’ list of cities that are becoming too expensive for retirees, according to this article on Yahoo Finance. The ranking is based on factors that include the percentage of population over the age of 65, median home list price, annual cost-of-living and taxation on Social Security and retirement income from other sources.
Those leaving the workforce before 65 need more cost-effective places to live.
Clients who received an inheritance are advised to keep the assets for a while and consider their options before doing anything, according to this article in The New York Times. They need to plan to avoid costly mistakes, such as not accounting for their tax bills and poor investment decisions. When clients inherit considerable assets, “there can be a feeling of invincibility, and when people feel invincible, they don’t make good decisions,” an expert says.
