How employees can make $500K last forever: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
How to make $500,000 last forever
Retiring with just $500,000 in savings is possible if clients find ways to generate 7% to 8% in income without relying heavily on withdrawals of their nest capital, according to this article on Forbes. One strategy to consider is to invest in the right closed-end funds or preferred shares. Other investment options for those who want to secure payouts from limited retirement assets are recession-proof REITs and shares with high dividend growth potential.
The ultimate all-value equity portfolio for clients under 35
Building an all-value equity portfolio can be a good strategy for younger investors to secure their retirement, as it offers a potential for higher returns, according to this article on MarketWatch. Data shows that value stocks are offered at bargain prices relative to profits, sales and other fundamentals, and these prices are a result of factors not related to the actual prospects for certain firms. Investors are also open to buying these stocks at higher prices when industries regain preferred status.
Should clients use life insurance to fund your retirement?
Retirement investors should rule out life insurance as an option as the financial product is not designed as an investment vehicle, according to this article on Yahoo Finance/U.S. News & World Report. Although life insurance offers tax-free growth on principal and tax-exempt withdrawals, it charges considerable fees during the policy's first 10 years. "This means that if anything happens over the first 10 years that would prevent you from being able to continue to pay your premiums, you're now out all the money that you have stashed away in the form of premiums, either in a policy lapse or where the policy will eat up all of your cash value just to keep itself alive," according to an adviser.
Women and retirement: How to save enough
Women should start saving for retirement early in their career, as they are likely to take a break from work and stop contributing to their savings plans, according to this article on Barron's. They should take advantage of the loophole in the tax system that allows their earning spouse to contribute to an IRA in their name if they have stopped working. This tax advantage is possible if they are married and file joint returns.
How your health plan can help you save for retirement
Workers should take advantage of a health savings account if their employer provides a high-deductible health plan, according to this article on CNBC. HSA contributions are tax-deductible, and distributions are tax-free if the funds are used for eligible expenses. "HSAs should be treated no differently from other retirement funds in terms of investing," a CFP says.