© 2019 SourceMedia. All rights reserved.

Recession fears could wreck clients’ retirement

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

The fear of a recession could wreck clients’ retirement

Retirement savers stand to lose more from the panic-driven selloff that often comes before a recession that the actual market downturn itself, writes a Forbes contributor. “In other words, it is the market’s fear of the future (recession) and not the actual event that is most important,” writes the expert. “By the time a recession is officially declared, you won’t need to react. The damage will already be done.”

Retirees are advised to tap into their Roth accounts last to minimize hefty tax bills associated with 401(k) distributions.

How to help clients get the most from this tax-free source of retirement income

Permanent life insurance can be a source of tax-free income in retirement, according to an article from CNBC. Clients can take a tax-free loan from the policy’s interest-bearing account — which increases in value without capital gains taxes. “It’s been one of my best fixed income investments because the cash value grows at more than 4% a year consistently,” according to a fee-only insurance consultant, adding that the policy is “a low-risk and tax-deferred fixed income investment with easy access to policy loans.”

Why clients should have an investment policy statement

Investors who don’t want to worry about market declines should have an investment policy statement, writes an expert in TheStreet. “An IPS is a document that details what percent of your portfolio you’ll invest in stocks, bonds and cash. The IPS also specifies your time horizon, investment objective, and risk tolerance,” he writes. “But most importantly, the IPS establishes when you will sell and when you buy. And it’s based on rules not on emotion.”

5 ways clients can boost their retirement income

Seniors should pay off debts before they retire to increase their retirement income, according to a Motley Fool article. Buying fixed annuities, investing in dividend-paying stocks and taking a part-time job can also help them boost income. Another strategy is to tap their home equity to get a reverse mortgage— which will provide tax-free income during retirement.

For reprint and licensing requests for this article, click here.