Employees should avoid these 3 Social Security mistakes
Our daily roundup of retirement news your clients may be thinking about.
Avoid these 3 Social Security mistakes
To maximize Social Security, clients should avoid claiming their benefits before reaching their full retirement age while still earning a wage income, according to this article on Motley Fool. They may also want to create an account on Social Security's official website to get a good estimate of their retirement benefits. Clients should also account for increase in their Medicare premiums, which are deducted from their Social Security benefits and could result in a substantial reduction in their net benefit.
Opinion: IRAs have drifted from their mission — states must help restore them
Most of the assets in IRAs are rollovers from employer plans, signifying the need for the federal government to intervene and prompt more people to contribute to the retirement account, writes Alicia H. Munnell, director of Boston College's Center for Retirement Research, in this article on MarketWatch. "It is time to turn IRAs back into an active savings vehicle by auto-enrolling those without an employer plan into these accounts, with the ability to opt out," writes Munnell. "Ideally, such an auto-IRA policy would be a federal government initiative. But absent federal action, a number of states have stepped into the breach."
How much can I expect to earn on my retirement savings?
A survey shows that investors are optimistic about their investment returns, given the market's 18% annualized return over the past 8 years, according to this article on CNNMoney. However, market forecasts predict much lower returns, given the prevailing economic and market conditions. Investors should not invest aggressively to compensate for lower return predictions, but they should stick to their investing strategy that reflects their tolerance for risks and the amount of time that they have their savings invested.
A 2-pronged strategy for retirees seeking safe cash flow: Non-traded REITs and annuities
Despite the risks that come with combining real estate investment trusts and fixed indexed annuities, this strategy would allow clients to create a steady income stream in retirement with the possibility of growth on principal and legacy for their loved ones, writes a CPA on Kiplinger. An FIA offers guaranteed lifetime income in retirement, and when combined with a public, non-traded REIT, retirees can expect at least 6% in annual cash flow while the original investment continues to grow, explains the expert.
Punching in past 65: Older-worker rate highest since 1962
Government data show that 19% of seniors aged 65 and older continue working, according to this article on USA Today. As people's longevity is on the rise, more older people opt to continue working past the retirement age to remain socially engaged and useful, but many of them are compelled to work because their retirement savings are either not enough or non-existent.