© 2020 Arizent. All rights reserved.

Which types of assets should clients spend first in retirement?

Register now

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

Which types of assets should clients spend first in retirement?
Seniors who hold retirement savings in various assets should develop a tax-efficient withdrawal strategy, according to Motley Fool. Senior clients should tap their liquid assets before dipping into their investment accounts, such as traditional and Roth IRAs, says one expert. “Several studies have found that in retirement, a client’s portfolio will last longer if they tap their taxable accounts first, then usually traditional accounts, and then Roth last. The Roth and traditional can be flipped in some situations, but basically drain your taxable accounts first.”

59% of retirees use Social Security as a major source of income -- and that's a problem
A report from the Employee Benefit Research Institute shows that 59% of seniors depend heavily on Social Security as a major source of retirement income, according to Fox Business. This should not be the case, as Social Security is not designed to fully replace their preretirement income. Clients are advised to sock away money in retirement accounts to create other sources of income.

Retirement: Age gap creates planning wrinkles
Age-gap couples are likely to face various hurdles when planning together for retirement, according to The San Diego Union-Tribune. It will be difficult for them to determine their retirement date, the age to start collecting Social Security and the right drawdown strategy. Paying for long-term care may also pose a challenge for couples with big age gap. “You have to throw away the playbook that you would use for a couple retiring at a similar age,” says an expert with The American College.

Your clients are probably not ready to retire — psychologically
Clients should start preparing for retirement three years before the scheduled date and ensure that they are mentally ready to take on a post-career life, according to MarketWatch. “People make the decision to retire based on an economic state rather than a life state,” says a retirement coach. “Retirement is a mental-health consideration. We’ve treated it as if it’s something you have to do, then, ‘Do you have enough money?’ — and conversation over.”

For reprint and licensing requests for this article, click here.