Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Parents are better off putting retirement saving ahead of funding their childrens’ college expenses, writes a CFP on Kiplinger. The retirement landscape, according to the expert, has changed almost as much as the cost of college has risen. “Remember that students can always borrow money for school — but there are no ‘retirement loans’ available for you to use to fund life after work,” the CFP says. “You need to pay yourself first, and then see how you can help your kids pay for college.”
Clients are advised to prepare for bigger health care costs in retirement, as Medicare will not cover all of these expenses, according to this CNBC article. To save for this retirement expense, they should review their Medicare coverage, consider switching plans to suit their medical needs and contribute to an HSA to save taxes on health care expenses. They are also advised to manage distributions from their savings accounts and create a tax-efficient strategy for tapping into these vehicles. “Figuring out optimal withdrawal strategies is where a good accountant or financial planner can help clients save a lot of money,” a CFP says.
Seniors who opt to continue working while receiving Social Security benefits can expect their earnings to boost their benefits if their annual income will be greater than one of the highest 35 years of earnings, according to this article in USA Today. Older workers who reach the age of 70 and are contributing to their retirement accounts are not required to start taking required minimum distributions from these accounts. Seniors who have to take the first RMD that year have until April 1 of the following tax year to take the withdrawal.
Careful planning and frugality can lead to early retirement – but only if clients are truly committed to the goal.
Clients should not think that they have saved more than enough for retirement, as their retirement expenses, such as medical and long-term care costs, could be heftier than anticipated, writes an expert in The Washington Post. This means that they should max out their retirement plan contributions and invest outside tax-advantaged accounts only when they need the money for the short term. “If you’d like to invest to say, save for a car down the road, or make major home improvements, investing outside of a retirement fund is a good idea,” she writes.
