Our daily roundup of retirement news your clients may be thinking about.

The 25x rule to early retirement
Clients may want to use the 25x rule to early retirement to determine if they are ready to leave the workplace for good, according to this article on Forbes. The rule states that people are financially prepared to retire if they have saved at least 25 times their annual expenses. For example, they should have $1,875,000 in retirement savings if their annual spending amounts to $75,000. Clients may adjust the computation if they expect to have other sources of income in retirement.

Source: Bloomberg
Source: Bloomberg

How to make goals-based planning work for you
Although goals-based planning is increasingly getting support in the financial services industry, many financial advisers have doubts about the strategy's effectiveness as a retirement planning strategy, according to this article on USA Today. Clients who use goals-based planning as a technique may not understand how much they actually need to achieve a specific goal, says an expert, adding that the real problem lies in the people's inability to vision their future. “Goals-based planning presumes we know what our goals are in 20-30 years. Except we don’t. We really don’t. We don’t know how to vision our future until it’s almost upon us.”

The 2 massive 401(k) mistakes business owners make, and how to avoid them
Many business owners who offer a 401(k) plan to their employees are unaware that they have the fiduciary responsibility to ensure that the 401(k) decisions that they make are for the best interest of their workers, according to this article on Kiplinger. This means that they can be held accountable for the plan and their personal assets will be at stake in case they lose a lawsuit or face a regulatory action. Read the article to know how business owners can avoid this scenario.

Life insurance in retirement: Who needs it?
Some experts believe that incorporating life insurance into the retirement investment strategy can be a smart move, according to this article on Morningstar. Clients can use insurance to help mitigate the risk of longevity in retirement and to gain liquidity in later years because of insurance policies' tax-sheltered status. Clients can also achieve estate tax liquidity using insurance, says an expert. "It's a defensible use in situations where the estate's assets are illiquid--let's say real estate or a business. You don’t want to sell the assets in a fire sale, and the estate tax comes due--insurance can be used to fund the tax liability."

Turning 70 1/2? Prepare to tap into your retirement accounts
Retirees who turn 70 1/2 should start taking required minimum distributions from their tax-deferred retirement accounts or face a hefty 50% penalty aside from the tax liability on the mandatory withdrawals, according to this article on CNBC. Those who don't need the RMD may want to reinvest it or consider donating the money directly to a charity to avoid taxes. Pre-retirees who have reached 59 1/2 can also withdraw the funds penalty-free, especially if they move to a lower tax bracket.

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