Public pensions need to consider that beneficiaries are living longer

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Public pensions need to consider that beneficiaries are living longer
Increased longevity of workers prompted the IRS to release in December new actuarial tables requiring private pension plans to adjust their mortality assumption, writes a Forbes contributor. Public pensions should also follow suit, writes the expert. "Unfortunately, these regulations do not apply to state and local public pensions. As such, public pension plans continue to bury their heads in the sand living in a time warp of decades-old actuarial assumptions."

Seniors in New Mexico, Utah, Maryland, Indiana and Wisconsin pay the highest state taxes, Kiplinger reports.
Hatsu Murakami, 90, knits at the Kirigaoka Day Home in Kita ward in Tokyo, Japan, on Tuesday, June 16, 2015. Tokyo is one of only four cities among the 71 most-populous urban centers ranked by the United Nations that are poised to shrink between 2014 and 2030, and the other three are also in Japan. Photographer: Yuriko Nakao/Bloomberg *** Local Caption *** Hatsu Murakami

Better than bonds? A look at uncapped fixed index annuities
Uncapped fixed index annuities can be a good alternative to bonds for investors looking for safer investments as they get close to retirement, according to this article on Kiplinger. That's because unlike bonds, these financial products do not suffer losses amid rising interest rates, and they have other advantages such as tax-deferral in retirement accounts and sustainable lifetime income with a rider offering. “Conventional wisdom has most investors de-risking their portfolios by allocating more heavily to bonds as they approach retirement... In this low-interest-rate environment, complacency can be a danger to [investors’] futures,” says an expert.

5 retirement-planning blind spots
Market risk, inflation and taxes are among the blind spots that can throw seniors off the track for a comfortable retirement, writes Morningstar's Christine Benz. Healthcare, long-term care costs as well as unexpected expenses can also bring unpleasant outcome for retirees, writes the expert. "[B]efore you pull the rip cord and start relying on your portfolio--rather than your salary--for living expenses, it's wise to make sure you're not missing anything on the financial front."

What is a backdoor Roth IRA?
An expert says that although a Roth IRA has income qualification limits, high income investors have the option of using the backdoor Roth strategy to contribute to the account, according to this article on Fox Business. However, consulting an accountant or a tax professional is recommended, as the strategy could trigger a tax event, explains the expert. "If the investor is still working and earns uneven income from one year to the next, they can potentially take advantage of the 'lean' years to convert a higher balance to Roth since they may be in a lower tax bracket. Further, the investor can 'spread' the tax burden across years by converting in stages rather than all at once."

Here's how Social Security generated $1 trillion in income last year
Although a report from Social Security Board of Trustees shows that its asset reserves will be depleted by 2034, the program has other sources of revenue to pay its benefit obligations, according to this article on Motley Fool. In fact, the report shows that Social Security generated $996.6 billion in income last year, thanks to payroll taxes, taxes on the benefits and interest earnings from asset reserves.

This article originally appeared in Financial Planning.
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Retirement planning Retirement income Retirement withdrawals IRAs Social Security benefits Roth IRAs Public pensions Pensions
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