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When taking Social Security at 62 could be wise

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

When taking Social Security at 62 could be wise
Higher-income seniors will be better off collecting Social Security benefits as early as age 62 than delaying their benefits, writes an investment adviser representative on Fox Business. That’s because deferring the benefits would force them to take substantial distributions from their investment accounts, which could push them to a higher tax bracket, explains the expert. “If they opted to take their Social Security payments at age 62, the monthly distribution amounts needed from their retirement savings accounts would be substantially smaller."

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Social Security checks are printed at the U.S. Treasury Philadelphia Finance Center in Philadelphia, Pennsylvania on February 11, 2005. Photographer: Dennis Brack/Bloomberg News

Fees increasingly important to target-date fund performance
Clients who intend to invest in target-date funds should account for the fees, which remain crucial to the due diligence process as these funds post the same performance, writes an expert on Morningstar. Fees charged by these funds are also on a decline, with fees from the cheapest funds dropping faster than those of other funds. "Fees have explained more of the performance difference between target-date funds further from retirement than those closer."

Minorities - particularly Hispanics - are increasingly unprepared for retirement
A study by Boston College Center for Retirement Research has found that working-age Americans are now less ready for the golden years than they were in 2017, with the prospects becoming much worse for Hispanics and other minorities, writes Alicia H. Munnell, the center’s director. "A shocking gap exists between the wealth holdings and income of white households on the one hand and black and Hispanic households on the other” the expert writes. "By 2016, median household earnings for white households had recovered from the global financial crisis, but earnings for black and Hispanic households were still below their 2007 levels."

Variable annuities for retirement savers go back to basics
Retirement savers should consider the pros and cons of buying a variable annuity even if insurers are now offering this financial product at low costs, writes an expert on Kiplinger. For example, clients should max out their contributions to 401(k) and other tax-deferred retirement accounts before investing in this type of annuity and remember that payouts are subject to ordinary income tax rates. “You have to look at your tax situation, your investment profile and how you like to invest,” an expert says.

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