Our daily roundup of retirement news your clients may be thinking about.
Many single baby boomers opt to stay put in retirement because they have no children who would advise them to move to an assisted living or continuous care community, writes a Forbes contributor. "In fact, even when there are adult children in the picture, many are not able to convince the parent to move to a safer location," writes the expert. "For many elders, the challenge of learning to navigate a new home ... meet new people, give up familiar surroundings and relinquish their treasured independence seems loathsome, insurmountable, or both."
This opinion piece from MarketWatch identifies the 10 rules that retirement savers should abide by to secure their golden years. One of the rules is that clients should not expect their taxes to be lower after they retire. "All the signs point to higher taxes in the future for everyone. To reduce my retirement tax bill, I favor Roth accounts and municipal bond mutual funds," writes the contributor. Other commandments included: Save much and save soon; Remember that Social Security was designed to replace no more than 40% of preretirement income; Remember that the nonfinancial aspects of your retirement are important; and put retirement savings ahead of other goals.
An expert says that although converting traditional IRA assets into a Roth account will trigger a taxable event, funds are expected to grow tax-free in the Roth while withdrawals will be non-taxable, according to this article on Morningstar. For older clients, the benefits of a Roth conversion is not for themselves but for their loved ones who will inherit the account, explains the expert. "The big benefit is not so much for yourself other than those other issues — you just want to get rid of that IRA and not have any required distributions — but for your children or grandchildren who will also enjoy tax-free withdrawals."
A study by E-Trade Financial has found that nearly six of 10 investors aged 18 to 34 claimed that they have withdrawn funds from their retirement account, according to this article on CNBC. The percentage of young investors tapping their savings has been on the rise since 2015. Such a move can be a poor decision to make, as clients will owe taxes plus penalty on the withdrawals before the age of 59½.
