Our daily roundup of retirement news your clients may be thinking about.
Retired Americans living abroad can still claim Social Security benefits, but they must see if their country of residence requires them to have a local bank account or they can use a U.S. based bank to receive the benefit electronically, according to WiseBread. People residing in Cuba and North Korea, however, will not receive benefits due to sanctions imposed by the U.S. Department of Treasury. They should remember to pay taxes in the U.S. plus possible taxes in their adopted country and they are required to report foreign assets greater than $10,000 to the Department of the Treasury.
Following the "4% withdrawal rule" developed over 40 years ago by financial William Bengen is a big mistake that can greatly affect a retiree's quality of life and savings longevity, writes an investment advisor on Kiplinger. The biggest flaw with the rule is its annual inflation adjustment as most retirees see their expenses typically decline. The rule also lacks flexibility and doesn't actually reflect the real-life spending habits of retirees.
New government regulations and major changes in the 401(k) industry over the last decade have modified the core dynamics of how employees’ retirement plans are managed, according to this article on Forbes. Some of these changes include the Labor Department's fiduciary rule, which mainly affected brokers who previously worked on commissions, and the required fee disclosures, which provided far higher transparency of how much revenue is generated from fees. Increasing plan audits, rising 401(k)-related lawsuits, and revenue sharing phase out are also changing how the 401(k) industry works.
Retirees don't need to concurrently apply for Social Security and Medicare unless they immediately need their Social Security earnings, according to Motley Fool. Sixty-five-year-old employees who have better health insurance coverage from their employers can consider enrolling first in Medicare Part A and wait for their company health plan to expire before enrolling in Medicare Part B. However, retirees should apply for Social Security once they reach 70, regardless of their employment status.
A HealthyCapital report showed that a hypothetical 45-year-old man with hypertension who follows doctor's orders and makes simple lifestyle adjustments can have an additional $100,348 by age 65 if he diverts his annual health care cost savings in a retirement portfolio with 6% annual return, according to Money. The study also found that a nine-pound weight loss in a 45-year-old obese man who is 70 pounds overweight can result in $22,881 lower pre-retirement health costs, while a 45-year-old man with well controlled diabetes can have $86,117 in retirement funds. Following the doctor's orders will also enable retirees to extend their life expectancy and dependence as well as delay long-term care.
