Our daily roundup of retirement news your clients may be thinking about.
The annuity industry stands to gain from the new Department of Labor rule imposing fiduciary standard on financial advisers giving retirement guidance, according to this article on MarketWatch. While most annuity types are easy to understand, other more complicated annuity products can be made more comprehensible. The new rule will also lead to lower built-in commissions, enhanced agent/advisor education, and increased regulation of indexed annuities. Clients will also get a much clearer value proposition for annuity products and be introduced to a broader range of product options once the new rule is implemented.
Investors should drop existing statistical models and turn to living standard risk to better gauge the risk to retirement security, according to an article in the Houston Chronicle. The living standard risk is a new, developing concept that accounts not only a person's financial assets, but other resources to determine their exposure to a major change in their standard of living throughout retirement.
Many seniors regret their decision to retire early and collect Social Security benefits before reaching their full retirement age after experiencing financial woes in old age, according to this article on The Wall Street Journal. Experts have developed a two-question quiz to help future retirees avoid making the same mistake. The test poses nearly identical questions but gauges the clients' consistency for time preferences to determine how committed they will be to the financial decisions that they make, such as delaying retirement benefits.
Many seniors defer retirement because they cannot afford to retire or the idea of leaving the workplace for good isn't appealing to them, writes a retirement adviser on Forbes. As he faces his own retirement, the expert decides to continue working as long as he can, and live a more meaningful and rewarding life in the golden years. "The new model of retirement, pioneered by younger boomers, is the way to go. With some planning and intention, most of us will be able to find ways to stay active and involved, and to live a life that not only keeps us interested, but provides value to others."
Older workers are allowed to contribute to their 401(k) plans even if they are working on a part-time basis and have reached a certain age, according to this article on Kiplinger. Those who reached the age of 70 1/2 can still make 401(k) contributions and may defer required minimum distributions if the plan rules permit. "Some employees who continue working at their employer past age 70½ find themselves eligible to continue making plan contributions but also having to take RMDs at the same time," says an expert.
