Our daily roundup of retirement news your clients may be thinking about.
Retirees show success in replacing pre-retirement income
An analysis of tax filings has found that many seniors succeeded in replacing their pre-retirement income after they retired, according to this article on The Wall Street Journal. The median retiree's spendable income is 103% of his or her spendable earnings before retirement, indicating that “spendable income rose for more than half of taxpayers,” the study found. “Most Americans maintain or increase their spendable incomes” after they started collecting Social Security, says one of the experts who conducted the study.
4 financial planning essentials to ease your clients' fears
Clients who are anxious about their retirement prospects can minimize their fear by creating a comprehensive retirement plan, according to this article on Kiplinger. Retirement investors should also make sure that their plan will allow them to shift from accumulation phase to spending phase, and that they minimize the fees and other costs that can eat away their savings. Another option is to annuitize a portion of their nest egg to create a source of guaranteed income in retirement.
Why today’s retirement savers face a longevity gap’
A study from the National Bureau of Economic Research has found that the total amount of retirement benefits that high earners would receive would be bigger by $150,000 on average than what workers in the low-income groups would get, according to this article on Fortune. This is because wealthy people have a longer life span, so they have a much longer time to collect the benefits than those with meager income, the study found. While policymakers are thinking of solutions to close the gap between the rich and the poor, financial advisers encourage retirement savers to save aggressively and increase their stock investments to prepare for tough times ahead.
The IRA mistake that can be fixed after Tax Day
Retirement savers should take caution at making last-minute contributions to their IRAs, as they run the risk of contributing beyond the limit and face a hefty penalty for excess contributions, according to this article on Forbes. Clients can keep track of their IRA contributions by sticking to the same custodian and making a one-time contribution annually or at the same time every year. Clients who contribute online should ensure that the tax year is correct, while those who make a check payment should write the tax year in the memo line.
Here's the formula early retirees use to know if they have enough money
People who are able to retire at an early age use the four percent rule for tapping their retirement assets without draining their portfolio, according to this article on CNBC. They use the same rule to determine the amount of money that they should save to generate the desired income. "It really came down to, once I have enough money where I can withdraw four percent, then I can walk away," says an early retiree. "I typically spend somewhere between $30,000 and $40,000 a year, meaning I needed to get to $1 million."