The best retirement plan for self-employed clients
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Choosing between retirement plans for self-employed clients
While SEP plans and solo 401(k) plans are both great options for retirement savings, a client's circumstances will determine which is that much better, according to a columnist in Forbes. Solo 401(k) plans allow clients to manage their own investments instead of paying a custodian, can be converted into a Roth IRA and can be borrowed from penalty-free if the loan is paid back on time. SEP plan benefits include tax-deductible startup fees and the ability to suspend contributions during times of hardship — something a plan administrator would normally not be able to do, according to the article.
A forgotten first step in wealth creation
An emergency fund is crucial for clients building wealth, according to this article in Kiplinger. With a reserve covering at least six months of core expenses, clients can protect themselves from setbacks such as a large medical bill, the loss of a job or a broken-down car. Saving this money now will prevent them from dipping into a 401(k) or tapping home equity when expenses crop up.
Health care cost forecasts: Expect to spend a lot
The average 65-year-old married client planning her health care costs should save $369,000 for herself and her spouse, according to the Motley Fool's coverage of a new report by Milliman, the actuarial firm. A report by Fidelity forecast a much smaller sum of $285,000. Regardless of the amount needed, clients can be encouraged to contribute to a health savings account. "While you may not manage to predict exactly what your medical needs will entail, you can bet on them eating up a substantial portion of your retirement budget," the article says.
Clients being targeted by Social Security suspension scam
Scammers preying on clients' fear of losing Social Security income are calling with new threats, according to the Washington Post. The IRS says this is a scam targeting seniors to steal their identity or their money. To prevent this, educating clients is key: "No, your Social Security number cannot be suspended, revoked, frozen or blocked. If anyone tells you that, hang up immediately," the article says.