Our daily roundup of retirement news your clients may be thinking about.
Clients who are preparing for the imminent death of a spouse have to manage important financial matters to cope with the loss, according to this article on MarketWatch. They will need to obtain certain documents, such as death certificate and last will and testament. In fact, this article suggests getting at least eight certified copies of the death certificate as they'll be needed for different reasons (for example, clients will need to furnish one to their life insurance companies to receive death benefits) and getting additional copies at a later date is often difficult and time consuming. Moreover, the article suggests they gather other paperwork, including a copy of their marriage license; the spouse's Social Security number and last statement; their spouse's insurance policy; passwords and logins for online accounts; the spouse's birth certificate; and the spouse's military discharge papers and veteran's benefit statement.
For retirement savers, the market rally following the presidential election ushers a good opportunity to rebalance their portfolios, according to this article on CNBC. Rebalancing compels them to buy and sell to keep their portfolio's ideal asset allocation. "The biggest mistake clients make when markets break records is chase what is doing well and sell what isn't," says a certified financial planner. "They need to do the opposite, which is what rebalancing accomplishes."
Retirement investors who are concerned about the impact of a market downturn may want to consider a mix of certificates of deposit and low-cost index mutual funds instead of indexed annuities for better investment outcome, according to this article on Kiplinger. Those who opt to hold CDs and index mutual funds outside an IRA or a tax-deferred account should account for the tax consequences, as earnings from these investments are taxable. For example, they may hold the index fund for more than one year before selling so capital gains are taxed at a long-term rate, which is lower than the rate for short-term gains.
I Bonds are investment options that offer attractive returns and are backed by the U.S. Treasury, making them safer than Social Security, according to this article on CNN. While these bonds have a nominal interest rate that is nearly similar to a high-yield CD, the rate is adjusted to inflation. Investors also face the tax liability on the accumulated interest from I Bonds at the end of the holding period, meaning the tax burden will not dampen the bonds' compounding value.
As the year winds down, retirement savers may want to increase contributions to their 401(k) plans and contribute enough to get the employer's match, according to this article on CNNMoney. By boosting their 401(k) contributions, they can reduce their taxable income and even get a tax deduction. They may also consider saving their holiday bonus in an IRA to defer taxes on the windfall or use the money to pay down debt.
