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Final steps for clients planning to retire in 2020

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

Clients looking to retire in 2020 have a few steps to take first
Seniors who are planning to retire next year are advised to take a few steps to make sure their planning works as expected, according to this CNBC article. These clients are advised to create a budget, factor in the tax liability on their retirement income and shore up their emergency fund. Seniors will also need to review their exposure to investment risks, pay down debt and save for health care costs and other unforeseen expenses.

401(k) moves to make next year
Working clients who want to maximize their employer-sponsored 401(k) plans next year are advised to act now and start investing in the account, according to this Bankrate article. They are advised to rebalance their 401(k) portfolio to stick to their target allocation and consider funding a Roth 401(k) if their plan offers such a feature. “With the Trump tax law due to sunset in 2025, we are facing higher rates in the future. It could be an excellent time to utilize the Roth 401(k) option and take advantage of the lower rates now," an expert says.

All parts of retirement must be in sync
Seniors who want to secure their post-career life are advised to ensure that all parts of their retirement plan will work together, writes a CFP in Kiplinger. A comprehensive retirement plan should not only have an income strategy, an appropriate asset allocation and a plan for health care, but also include estate planning tools and tax-saving strategies."If you don’t prepare a long-term plan, taxes could take a sizable chunk out of your savings," he writes.

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November 6

5 ways to reduce clients’ RMDs
Seniors can expect an increase in their tax bill once they start taking RMDs from their traditional retirement accounts, as these withdrawals will be subject to income taxes, according to this Motley Fool article. To minimize these mandatory distributions, clients are advised to withdraw from these accounts before reaching the age of 70 1/2, direct some of their savings to a Roth IRA and HSA, which are not subject to RMD rules. Working past the age of 70 1/2 will allow seniors to defer their RMDs, while donating the distributions directly to charity will also enable them to avoid income taxes on the withdrawals.

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