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Our daily roundup of retirement news your clients may be thinking about.

How much do my clients really need in their emergency funds?
Retirement savers who want to put up an emergency fund should have savings earmarked for contingencies that are equal to about six months of their living expenses, according to MarketWatch. Those who have a hard time looking for a job should consider a bigger fund. The emergency fund may still be part of a retirement or savings account, provided the withdrawals will not be subject to a penalty or tax. — MarketWatch

How Americans blew $1.7 trillion in retirement savings
Many clients tend to be biased in favor of the things that make them happy instead of their well-being in retirement, costing them $1.7 trillion in lost savings, according to a study. The research also found "exponential-growth bias" among many people, with retirement savings getting smaller as people become more biased. By being aware of their personal tendencies, clients should seek professional advice or allow intervention, such as automatic contribution and escalation in retirement plans, to address these biases and put their retirement plans back on track. — Bloomberg

Here’s how much later your clients would have to retire if market returns drop
Retirement investors can expect their investments will generate smaller returns over the next 20 years compared with what they had received in the past three decades, according to a study by the McKinsey Global Institute. The decline in future returns could be attributed to sluggish economy, inflation, corporate profit pressures, and potentially rising interest rates, the study says. "We've been in a super-bull market," says an expert, adding that "[i]nvestors need to reset their expectations for returns that will be two to four [percentage points] lower in real terms." — The Wall Street Journal

Entrepreneurial risk: Financing a client's franchise using their retirement account
Clients who want to launch a business may consider a franchise to remove the daunting challenges associated with a start-up, according to Forbes. Using retirement savings to fund a franchise is a feasible option, as it will just be a stock transfer and not a loan. This strategy limits the debt and makes use of a portion or the entire fund without any penalty. To do this, clients must put up the franchise as a C corporation and account for some tax issues. — Forbes

Safe retirement investments that yield 7% a year?

There are no investment options that can give retirees a 7% annual return without running the risk of losing the principal, according to this article on CNNMoney. Investments that provide the most protection, such as savings accounts, money-market accounts and short-term CDs, can only offer yields between 1% and 2%. While retirees may get bigger yields from dividend stocks and funds, these investments are risky since they are prone to market volatility. — CNNMoney

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