How to help clients decide between a Roth and traditional 401(k)

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

Roth 401(k) or traditional 401(k) — which is best for your clients?
Working clients are advised to consider contributing to a Roth 401(k) if their plan offers such an option, depending on their current tax circumstances and tax situation in retirement, writes an expert in TheStreet. A Roth 401(k) can help clients diversify their retirement accounts, especially for those whose savings are concentrated in traditional 401(k)s and IRAs, he writes. "Nobody knows where income tax rates will head in the future. Having retirement assets in both traditional and Roth accounts can help clients hedge their tax bets for retirement."

This is how clients can build emergency savings in the wake of coronavirus
Clients are advised to have a cash reserve equivalent to three to six months of expenses amid the health crisis caused by COVID-19, according to this article in Fox Business. They are advised to begin building an emergency fund as soon as they can, manage their spending and create an emergency budget. Clients should prefer lower-cost options to raise funds, set aside even a small amount and consider getting help from their landlord, utility providers and mortgage lenders to ease their financial burdens, the article says.

How clients can find their own personal retirement tax haven
Relocating to a tax-friendly and less expensive location in retirement can be a great strategy for seniors to stretch their savings and secure their retirement, according to this article in MarketWatch. When choosing the right place to retire, clients are advised to compare the property, income, excise and sales taxes in these possible locations. They should also compare state and local taxes for food and transient occupancy, luxury, car, gasoline and intangible assets.

Worst bond funds of 2020 underscore differences in portfolios
Funds with higher risk profiles — high-yield and emerging markets — are now paying the price.

How long do clients have to work to qualify for Social Security?
Clients have to earn 40 work credits to qualify for Social Security retirement benefits, according to this article in Motley Fool. This means they have to post at least 10 working years, as they can earn four credits per year regardless of salary. However, workers may have to work for more than 10 years, as their benefits will be based on average wages over their 35 highest-earning years, according to the article.

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401(k) Retirement benefits Roth 401(k) Coronavirus Savings accounts Tax planning Retirement planning Retirement readiness Social Security
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