Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Clients aiming to retire early should be wary of potential downsides , according to the author of this article in CNBC, who retired at age 24 with $3 million. Early retirees are likely to suffer from identity crises, doubt their decision and may be treated as misfits by others. They may also not be as happy as they anticipated and could experience severe boredom, according to the article.
Average Americans aged 65 and older hold about $192,877 in their 401(k) plans while the median value is around $58,035, according to a Vanguard report cited in this article in Fox Business. Income, age and job tenure have the biggest impact on 401(k) account balances.
It might be tempting for a client to borrow from their IRA or even sell property to it, but if they do they could be penalized, according to an article in Forbes. Other costly mistakes include contributing more than the maximum amount, not accounting for the income cap on Roth contributions, and not taking required minimum distributions on time. It is also a bad idea to use IRA assets as loan collateral because of the hefty interest involved, the article says.
Clients could put their retirement plans at risk if they fail to prepare for Medicare premiums and deductibles — as well as long-term care costs, according to this article in the Motley Fool. If clients are stashing money in a 401(k) or traditional IRA, remind them that they will need to pay income taxes on the money they withdraw during retirement. They may not have quite as much cash to spend as they think.
