When end-of-life planning is suddenly closer than you thought

Register now

Our daily roundup of retirement news your clients may be thinking about.

When end-of-life planning is suddenly a lot closer than you thought
Clients who intend to leave a legacy to their loved ones should consider using a Roth IRA, according to this article on CNBC. That’s just one way to lighten the tax burden because the account is funded with after-tax dollars. Another option is to leave the inheritance in a brokerage account, as the account will receive a step-up in basis, meaning the heirs will face no capital gains tax on appreciated investments. If an asset has declined in value, however, it might be worth considering selling the stock, mutual fund or ETF because the original owner is able to sell and deduct the loss. But heirs would not be able to take this step-down, since they’d inherit the stock at a new, lower basis.

Millennials making key investment, retirement mistakes
A study by the Bank of the West has found that although 66% of millennials were confident in their investing ability and aware that they could take more risks, two-thirds of these younger investors opted to keep their money outside the market, according to this article from Fox Business. “Millennials have been stuffing their savings under the mattress instead of putting their income to work through strategic investments,” an analyst with the bank said in a statement. “While this may seem safe, they are putting their goals at risk by keeping cash on hand. While they are young, millennials have time on their side and could be missing an opportunity to grow their savings over a lifetime.”

Americans' ideal retirement age—and why it's not realistic
Most Americans consider 61 to be the ideal age to retire, according to this article on personal finance website Motley Fool, citing a new survey. However, seniors will be better off retiring at a later age. For example, retirees will can claim Social Security benefits as soon as they turn 62, but filing before the full retirement age can mean a permanent reduction in their benefits. Those who intend to retire at age 61 are advised to save aggressively and invest their savings in the stock market for investment growth.

Saving for retirement when you have a side hustle
Clients can sock away their earnings from a side hustle in a solo 401(k) or a Simple Employee Pension and qualify for a tax deduction on the contributions, according to this article from Kiplinger. They can make up to $55,000 in contributions ($61,000 for those aged 50 an older) to a solo 401(k) this year, as they can contribute to the plan both as an employer and an employee. However, their tax-deductible contributions to a solo 401(k) cannot exceed their net self-employment income.

10 hidden fees to be aware of in retirement
Home expenses are among the hidden costs that seniors will face after they retire, according to this article from U.S. News & World Report. Aside from unforeseen repairs, retirees may also owe more in property taxes if they live in some regions. Seniors who want to save on property taxes are advised to check for available tax breaks for retirees. “Look into property taxes that may go down or freeze for seniors in your area that you might be able to apply for,” says an expert.

For reprint and licensing requests for this article, click here.
Retirement income Roth IRAs IRAs 401(k) ETFs Bank of the West