A Government Accountability Office report shows that 90% of retirement income of one-third of households headed by Americans aged 65 and older come from Social Security, according to this article on CBS Moneywatch. This means that these retirees will have to make a big adjustment, as Social Security is meant to replace only 40% of their pre-retirement earnings. They will need to reduce spending, boost savings, work longer and stay fit.
Investing in bitcoin using a self-directed IRA is increasingly becoming a popular option for clients who want to include bitcoin in their portfolio, according to this article on Kiplinger. While bitcoin's value has increased in recent years, the cryptocurrency may not be viable in the long term. Although the debate on bitcoin's legality continues, the IRS has no rules prohibiting bitcoin investments in IRAs.
Retirees stand to gain from rebalancing their portfolio, as it does more than simply minimizing risk exposure in their portfolio, according to this article on Morningstar. Rebalancing enables them to meet in-retirement cash-flow needs and take required minimum distributions from tax-deferred accounts. It also allows them to donate appreciated investments in taxable accounts to charity for tax saving purposes.
Data from Fidelity Investments show that 61% of retirees who own an IRA owe a hefty penalty for failing to take their required minimum distributions from their account, according to this article on Motley Fool. Retirees who reach 70 1/2 this year have until April to take their first RMD from their tax-deferred retirement account, while those who are older should withdraw the mandatory distribution by Dec. 31. Aside from taxes, retirees who fail to withdraw their RMDs on time shall owe a penalty equivalent to 50% of the RMD amount.
Retirees who are on Social Security cannot avoid the FICA taxes if they decide to go back to work and make money, according to this article on Forbes. However, their wage earnings could boost their income and be enough write off their tax liability.
