Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
A senior can expect their earnings to boost their Social Security benefits even if they made the income after the age of 70, according to this Forbes article. "Your Social Security retirement benefit rate is based on your highest 35 years of wage-indexed earnings and your benefit rate can be recalculated after any year in which you earn more than you did in one of your previous highest 35 years," the article says.
Seniors will need to replace 70% to 80% of their preretirement income to secure their post-career life, according to experts in this article from Motley Fool. Those wanting a more precise estimate of their retirement income are advised to subtract all expenses that they won't have in retirement from their income and add ones they expect to have after they retire. They are also advised to account for changes in their tax situation. For instance, they will face taxes on traditional 401(k) and IRA withdrawals, and they may owe taxes on a portion of their Social Security benefits.
Retired clients must avoid delaying their IRA contributions and eliminate unnecessary "pain points" to make the most of the tax-favored account, writes Morningstar's Christine Benz. Clients should consider dollar-cost averaging to make IRA contributions easier and avoid rushing the contributions as the deadline nears, she says. "I like the idea of dollar-cost averaging into an IRA — contributing enough each month to hit the maximum allowable contribution, just as you might do with your 401(k)."
There are various mistakes clients can easily avoid to ensure that they maximize their Social Security benefits, according to this article in TheStreet. The most costly error many clients make is filing for retirement benefits too early, according to an expert. “There is an enormous return for most people waiting until 70 to collect their highest possible retirement benefits.”
Technology, declining budgets and other factors are radically changing how and which tax returns get looked at.
While reports point to workers aged 22 to 37 having more savings compared with Gen Xers at the same age, millennials are not really saving enough to secure retirement, writes Alicia H. Munnell, director of Boston College Center for Retirement Research. That's because when they are compared with their older counterparts, millennials face considerable student debt, they will receive less in Social Security benefits, and half of them have no access to an employer-sponsored retirement plan, she writes. "They will also face much longer periods of retirement due to rising life expectancy, high and rapidly rising health care costs, and historically low interest rates."
