Our daily roundup of retirement news your clients may be thinking about.
Amid the major changes to the tax code, the IRS has issued warnings to taxpayers (most recently to retirees) to ensure that they have enough taxes withheld during the year and avoid being penalized, according to this article from the Washington Post. An IRS spokesman said that the following people should make sure to check their withholding taxes: people who get a pension, Social Security beneficiaries, people who used to itemize tax deductions but will now use the high standard deduction, those who have a significant amount of income not part of withholding, people who belong to a two-wage-earning household and those with a complex tax situation.
When planning for retirement, women should set aside more money than their spouses as women tend to live longer than men, according to this article on Fox Business. Since gender pay gap still exists today and most women still earn less than their male counterparts, female employees should be saving at least 15% of their gross income, which is equivalent to one hour per day of their incomes. Saving half of that amount is one of the most crucial mistakes made by most women in retirement saving.
Depending too much on Social Security for retirement income is a mistake that many clients are making, according to this article on CNNMoney. It is also mistake for clients to expect their living costs to decline significantly in retirement and to miss out on catch-up contributions. Retirees should also anticipate the impact of taxes on income, especially when they take distributions from tax-deferred accounts.
Seniors should be aware of the importance of their Social Security benefits since most of them will derive their half of their future income from it, aside from other investments they have made in the past. Financial well-being is key to one's retirement and this article on personal finance website Motley Fool offers a step-by-step guide to understanding how much a potential retiree could gain from those Social Security benefits. The most important step though is to make sure one is qualified for a retirement benefit and once that is confirmed make sure that one’s annual earnings are adjusted for inflation.
