Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Unknown to many older workers, seniors aged 55 and above who are separated from employment are allowed to take penalty-free withdrawals from their 401(k), 403(b) and 457 plans, according to this article on Kiplinger. However, this separation of service rule does not apply to IRAs. Moreover, the withdrawals will also trigger a tax bill that could push account holders to a higher tax bracket. Those who consider taking such withdrawals should get professional advice to ensure they make the right decision.
Seniors who consider working on a part-time basis may want to offer their professional services as a consultant, according to this article on MarketWatch. They may also work as an interpreter or translator or a project manager. Other fulfilling part-time jobs for retirees are a bookkeeper, an accountant or tax preparer, or an adjunct professor.
The increase in Social Security benefits that workers can expect after paying bigger payroll taxes is not directly proportional to the amount of their income, according to this article on Motley Fool. The monthly benefit payouts are expected to go up fast for low-income taxpayers but the increase slows down for those from the middle- and high-income groups. This is because the benefit formula is designed to supplement income and not to replace the retirees' pre-retirement income.
Clients who want to boost their savings should consider taking on a side hustle for additional income and start saving and investing the money in a retirement account such as Roth IRA, writes a young CNBC contributor. They should also negotiate for a bigger pay, avoid the so-called lifestyle inflation and learn from their financial blunders, adds the expert. They should also create a budget that divides spending into three buckets — living expenses, retirement and other financial goals, and recreation and entertainment.
