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

Five 401(k) tips for youngest clients
College graduates who are working for the first time should take advantage of the 401(k) plan that their employer provides by contributing to it as soon as they can, according to this article on CNBC. Their contribution should be enough to get their employer's matching contribution, and they should pick low-cost investment options, such as ETFs and index mutual funds. New 401(k) participants are advised to seek professional advice or the managed account service offered by the plan, and they should choose a target-date fund if their plan has no advice component. They should also keep in mind that a regular 401(k) plan and a Roth 401(k) are subject to different tax treatments, which will affect their tax situation. — CNBC

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3 Reasons to file for Social Security on time
Filing for Social Security retirement benefits at full retirement age (FRA) is a sensible move, as the benefits will help replace pre-retirement income and subsequently make the transition into retired life easier, according to this article on Motley Fool. Retirees will also get just the right amount of benefits if they start collecting them at FRA. Those who opt to apply for their benefits before their FRA will have to worry about forfeiting some of the benefits, an outcome they can avoid if they decide to apply when they reach their FRA. — Motley Fool

Inheriting a retirement account? Lump sum payouts can be costly
Clients who inherit retirement accounts from their deceased spouses should avoid taking lump sum payouts, as this could lead to a hefty tax bill, according to this article on MarketWatch. Receiving the benefit every month is a better option for those that expect to live longer than most people and know little about markets and investment management. The monthly benefit option is also recommended if they have no intention of leaving something behind for their loved ones. — MarketWatch

Pension returns slump, squeezing states and cities
Public pensions' $1 trillion funding gap could worsen as their 20-year annualized returns are expected to decrease to 7.47% based on estimates from Wilshire Trust Universe Comparison Service. “Many states and local governments may be facing difficult choices if investment returns remain low,” says an expert with the National Association of State Retirement Administrators. “The money has to come from somewhere.” — The Wall Street Journal

Older clients are holding the economy back
A report from the National Bureau of Economic Research estimates that the national economic output per capita would drop by 5.5% with a 10% increase in the number of Americans aged 60 and above. Based on Census data from 1980 to 2010, the gross domestic product over that period was "9.2% lower than it otherwise would have been absent population aging," as the number of older Americans grew 16.8%, the researchers wrote. "This dramatic shift in the age structure of the U.S. population ... has the potential to negatively impact the performance of the economy as well as the sustainability of government entitlement programs, and could result in a decline in consumption for the population as a whole." — U.S. News & World Report

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