Our daily roundup of retirement news your clients may be thinking about.
To create a smart claiming strategy for their Social Security benefits, clients should determine the benefits they would receive if they file at age 62, at full retirement age, and after their FRA, according to this article on CBS Moneywatch. Seniors will be better off delaying their benefits if they expect to live longer and intend to continue working past their retirement age. Those who think that they will have a shorter life span should consider filing early to enjoy the benefits while they can.
A survey by CareerBuilder has found that more than 50% of workers aged 60 and older are deferring retirement, according to this article on CNBC. "I think some of this is residual anxiety," says an expert with CareerBuilder. "The recession wasn't that long ago, and it changed the financial picture for a lot of people. Some older workers might rather be safe than sorry."
Diversifying a portfolio and investing in index funds and low-cost funds are investment strategies that can help retirement investors improve their prospects, writes a Forbes contributor. Clients can also enhance their retirement portfolio by balancing their stock and bond allocations and adopt a buy-and-hold strategy, writes the expert. "As long as you diversify your investments and position yourself to withstand market volatility, you'll come out ahead. But, remember, only invest your money after you've taken a hard look at the fees, too. Be safe out there."
Some 401(k) plans offer "in-service distribution," which allows participants to improve the plan without resigning from their jobs, according to this article on Morningstar. This option enables them to transfer their balance to an IRA, but some plans allow only employer and employee aftertax contributions if they are age 59 1/2. Another option is the "in-plan conversion," in which the 401(k) participants can convert traditional or aftertax assets into a Roth 401(k). This option will benefit workers who are likely to move to a higher tax bracket by the time they start taking withdrawals from the plan.
Even under the new tax law, contributing to a Roth IRA is a smart move, as the account is a good vehicle to save for college expenses while building their nest egg, according to this article on Motley Fool. That's because the contributions will not be subject to taxes upon withdrawal, and the clients will owe no penalty except taxes on the earnings portion of the withdrawn amount. Clients will also owe no early withdrawal penalty on distributions for their first home purchase and may tap into their Roth IRA for emergency purposes without incurring any taxes.
