Our daily roundup of retirement news your clients may be thinking about.
Look to small-cap dividend payers in retirement
Clients who are looking for new investments may want to invest in small-cap dividend payers, writes an expert for Kiplinger. Although smaller companies could be volatile, those that pay dividends tend to be more mature and profitable. Small caps also offer diversification, partly because they tend to generate most of their revenues in their home markets, as opposed to large multinational companies’ fortunes that are tied to the global economy. Investors should veer away from "extreme" dividend payers, as they end up underperforming compared with those with moderate payouts.
Clients can use this 2-income strategy and possibly retire with millions
Clients with multiple income streams should consider the "starve and stack method" to save and improve their prospects in retirement, writes an expert on MarketWatch. This Is when a couple has two incomes, but live off only one, the article says. One income has to cover regular household bills and expenses, freeing up all of the second income to put toward a big financial goal, like paying off debt or investing. "'Starve' just means you’re just depriving yourself of some of the comforts a second income could afford... That’s where the “stack” part comes in: You’re literally stacking your benefits over time, thanks to the power of compounding."
The new tax law: Retirement savings
Lawmakers decided to remove a provision that would limit contributions to 401(k) plans and other retirement accounts before passing the new tax law, but the law makes a few changes that affect retirement savers, according to this article on The Wall Street Journal. For example, the new law gives workers until they file their tax return to repay their outstanding 401(k) loan with a former employer. And workers are no longer allowed to undo a Roth conversion under the new tax law.
Only 10% of women are confident they'll retire fully
A study by the Transamerica Center for Retirement Studies has found that only 10% of women are optimistic that they would live comfortably in retirement, according to this article on personal finance website Motley Fool. To improve their retirement prospects, women should max out contributions to their retirement plans and put their savings in the right investments. They should also consider working longer to enable them to save more, avoid tapping into their retirement accounts early on, and delay their Social Security benefits.
Why you need to look at your 401(k) statement right now
Clients may want to check their 401(k) statement following the recent market correction, according to this article from Money. However, they should not focus on the possible losses in their 401(k) portfolio, as the decline will probably not become long lasting. Instead, they should check out their retirement plan fees, as these costs could significantly reduce their overall returns.