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

Lower your expectations on pension-plan promises
Workers with pension plans should avoid setting their expectations too high, according to this article on Kiplinger. Many private and public pensions are in the red, because people's life span is increasing and interest rates are dwindling. Clients are advised to look for options that will improve their prospects, such a Roth IRA for greater after-tax income and life insurance for guaranteed tax-advantaged lifetime income in retirement.

Seniors in New Mexico, Utah, Maryland, Indiana and Wisconsin pay the highest state taxes, Kiplinger reports.
Bloomberg News

Retirement risks keep rising, and this is why
The retirement risks in the U.S. continue to rise, and this can be attributed to people's increased longevity, according to this opinion piece on Bloomberg. "[T]his rise in life expectancy figures directly into the National Retirement Risk Index via the annuity rate calculations," states this opinion piece. "But it's also a major reason corporations have stepped away from providing defined-benefit pensions and retiree health care, and is the major reason Congress voted in 1983 to slowly shift the full retirement age used in calculating Social Security benefits from 65 to 67."

3 hidden investing costs you can't afford to ignore
Poor tax planning can lead to unnecessary costs for retirement investors, according to this article on Motley Fool. For example, clients fail to maximize the tax benefits of 401(k) and other tax-favored investment accounts. Investing in low-cost fund options can also be tax-inefficient as harvesting losses and selling off high-gain assets will not be possible with these investments. Clients may also lose from improper portfolio positioning and risk management and from not accounting for Social Security and Medicare in their strategy.

Delaying retirement by up to 6 months is equivalent to saving an additional 1% over 30 years
A study by the National Bureau of Economic Research has found that people can improve their retirement prospects by working longer and pushing their retirement date at a much later age, according to this article on MarketWatch. That's because working longer would enable them to delay their Social Security retirement benefits and allow the benefit to increase, the study says. The case is also the same with 401(k) withdrawals, as workers can continue contributing to the plan and add more years for their savings to grow.

Ask Larry: Is previous income subject to the earnings test?
Older workers who intend to retire and file for Social Security can expect all their earnings for the year, including the wage they received before the filing date, to be counted toward the annual earnings test, according to this article on Forbes. However, in the first year of benefit entitlement, Social Security may use a separate test to determine their benefit payout for the month in which their income did not exceed $1,410, regardless of their annual income.

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