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Side-hustles are becoming the norm in retirement

Senior clients may consider contributing to a Roth account instead of a traditional retirement account before leaving the workforce for good.

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

Is the side-hustle a new dance seniors are learning?
There’s an increasing number of older workers who opt to stay in the labor force through their retirement, according to data from the Bureau of Labor Statistics in this article in Kiplinger. “Over the last 10 years, we've seen people 55 and older increasingly seek out freelance, part-time and project-based work, and we expect this trend will continue, thanks largely to the rise of remote work," says an expert. "Usually we see this semi-retirement work arrangement because people want to stay active and contribute professionally while also supplementing their income.”

Roth IRA or a taxable brokerage account
Clients are advised to build an emergency fund and contribute to an employer-sponsored retirement plan before investing in the long term, according to this article in CNBC. They will be better off investing in a Roth IRA if their goal is to secure retirement or build long-term wealth. “Investing in something that gives you a tax break will almost always be preferable to investing inside a taxable account. I think of a taxable account as something to explore after you have funded your 401(k) and your IRA,” says Morningstar's Christine Benz.

Social Security can help bolster savings but retirement crisis is real for many
Social Security offers a big help for low-income workers to prepare for retirement, a report from The New School's Schwartz Center for Economic Policy Analysis shows in this Fox Business article. However, clients cannot depend solely on their retirement benefits to achieve financial security in their post-career life, the report claims. “Though Social Security keeps most retirees out of poverty, almost all workers also need income from employer-based retirement savings to maintain pre-retirement living standards.”

From closed-end funds to Reg BI, here's what could be playing out this year.
January 7

RMDs: When do clients take one and how to calculate it?
Seniors are advised to know the changes to the RMD rules for IRAs under the Secure Act to ensure that they comply with the mandatory withdrawals on time, according to this article in Kiplinger. Under the new law, seniors born on or after July 1, 1949 will have to wait until the age of 72 to start taking RMDs from their traditional IRAs. Those who were born before that are subject to the old rules, meaning they have to commence the withdrawals in the year they turn 70 1/2.

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