Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
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Errors are regrettably common. They are also easily avoidable.
April 1 -
Military families can use one of these provisions to seriously cut their tax burden. Plus, can clients make an IRA contribution on behalf of a deceased person?
October 23 -
Financial planners don’t have to be attorneys to help clients avoid high cost oversights
December 24
Client worries about retirement aren't backed up by government data, according to Andrew Biggs, an analyst from the American Enterprise Institute writing in MarketWatch. From 1979 to 2016, the average income of retiree households grew 104% above inflation, while working-age households' income rose 64%. The trend is not limited to high-net-worth clients: Middle-income retirees saw their Social Security benefits rise about 50% after inflation, while their private retirement benefits rose 150%, the analyst writes.
The average expense ratio among the leading 20 is nearly 40 basis points cheaper than what investors paid on average last year.
Children of clients will pay more taxes on inherited IRA assets thanks to the Tax Cuts and Jobs Act, according to Mike Piershale, a wealth manager writing in Kiplinger. Under the law, a child’s unearned income is subject to the same tax rates as trusts and estates, instead of the income tax rate paid by their parents. As a result, a 37% top tax rate will kick in after clients' children receive more than $12,501 in taxable income, the wealth manager says.
On average, clients think they need $1.7 million to retire comfortably, according to a survey by Charles Schwab Retirement Plan Service reported on by Motley Fool. It could be a reasonable estimate, considering that lifespans are increasing, but what's right for each client depends on personal circumstances including when they plan to stop working and their estimated living expenses in retirement, the article says.
Clients are advised to reconsider retiring before they amass any savings, according to a Yahoo Finance article. Instead they should aim to work longer, which will bring in more money and increase their future Social Security benefit. Downsizing their home will save on a large living expense, and selling assets such as an RV or motorcycle can bring in sizable chunks of cash at a time. Other solutions include monetizing a hobby, such as needlework or guiding tours, that they had previously done for free. Clients may also qualify for some government assistance, the article says, and should consider asking family for help as well.
