Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Millennials are departing from the traditional notion of retirement to adapt to the changing financial landscape and realities, writes a Forbes contributor. Compared with their elders, millennials are more savvy consumers who minimize their expenses and are less inclined to spend on material goods, he says. "In addition, they are erasing the stigma of living with their parents," according to the contributor. “Formerly seen as a failure to launch, staying in their parents’ home after graduation is now widely viewed as a smart financial decision, especially for those millennials with student loans.”
Married clients with a non-working spouse have the option of funding a spousal IRA as a way to boost their savings in tax-advantaged retirement accounts, according to this article in U.S. News and World Report. They can even take advantage of the $1,000 catch-up contribution if their spouse is older than 50. They should also consider a Roth IRA to boost their tax-free income in retirement and avoid the RMD rules for traditional retirement accounts.
The number of baby boomers in the workforce will grow faster than other age categories in 2020, according to a Glassdoor report in this CNBC article. Data from the Department of Labor show that the percentage of older workers increased to nearly 20% last year from less than 12% recorded 20 years earlier. Many retirees would also be forced to return to the labor force, as their pension payments would not be enough to cover their expenses, according to the study.
These employers offer plans that pay as much as $6.52 per hour in contributions.
Clients who want to start a business after 50 have the option of dipping into their 401(k) savings to raise the funds, according to this MarketWatch article. Borrowing against a 401(k) should be a last-resort option, however it can provide these clients more control of their money than sourcing funds from a lending institution. They can transfer the 401(k) funds into a new plan created purposely for the new business without extra debt and tax penalties. They may also opt for rollover for business startups, which “allows [them] to do a partial rollover from a retirement account as [their] cash injection to get [their] business started — tax-free and penalty-free,” an expert says.
