How will employees spend their time in retirement

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

How will clients spend their time in retirement?
Clients will have plenty of time to spare after they retire, and hiring a retirement coach can help them create a plan on how they can spend their free time more meaningfully, according to this article in USA Today. “One of the goals of a retirement coach is to help people see retirement from a fresh perspective, to open up new thoughts and ideas,” says an expert. “People often enter retirement with vague ideas and assumptions and suddenly don’t find retirement as fulfilling as they hoped.”

Retirement retirees 2 by Bloomberg News
Elderly pedestrians walk on Eastbourne Pier in Eastbourne, U.K., on Monday, Aug. 22, 2016. Pensions are looking like an economic time bomb for Britain, meaning investors had better watch how the nation tries to defuse it. Photographer: Matthew Lloyd/Bloomberg

Understanding the options when inheriting an IRA from a non-spouse
Traditional IRA holders are subject to required minimum distributions, and clients who inherited an IRA from a non-spouse will have to take the mandatory distributions using the life expectancy rule or the five-year rule, according to this article on Forbes. Non-spouse beneficiaries can also compute the RMD amounts using the life expectancy rules, and they should start taking the required distributions on or before Dec. 31 of the year that the original IRA holder died.

Why this works better than the 4% rule
Retirement investors may want to look into BlackRock's cost of retirement income indexes to get a better estimate of the amount of savings that they need to secure their golden years, according to this article on CNBC. The CoRI indexes show that retirement income moves up or down depending on interest rates and inflation, says an expert. The common 4% rule may not be a dependable tool to estimate how much savings clients would need to cover their retirement needs, says the expert. "A wealth target is problematic because it doesn't take into consideration current interest rates and inflation."

How dividend-paying stocks can energize your portfolio
Investors are inclined to reduce their risk exposure as they approach or reach retirement, so they may want to consider dividend-paying stocks to keep those returns coming, writes an expert on Kiplinger. This is because dividend-paying stocks help reduce their portfolio's overall volatility, writes the expert. "Dividend-paying stocks may give you that same potential for regular income. You can still strive for a decent return on your investment while potentially having greater confidence in your retirement strategy because of regular dividend payments."

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