Should clients ever put all their savings in stocks: Retirement Scan

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

Should clients ever put 100% of retirement savings in stocks?
Retirement savers should avoid investing all of their retirement savings in stocks even if they can generate enough income from Social Security benefits and annuities to cover their needs, according to this article on CNNMoney. It is misguided to treat Social Security and annuities as actual bonds, as people can't sell a portion of their Social Security and annuity like securities when they need to raise funds. An all-stock portfolio could suffer a great blow from a market downturn and the losses might be too big for retirees to recover.

A simple ‘minimum benefit’ idea for Social Security
Creating a meaningful "minimum benefit" would help reduce poverty among low-income workers who retire and start collecting Social Security benefits at age 62 or 63, according to this guest-written article on MarketWatch. To achieve this, an expert has proposed changing the third tranche in the three-step process used in calculating benefits without modifying the first, which would provide a basic retirement income without making an adjustment based on the age the worker files for the benefits. "Thus, workers with [average indexed monthly earnings] below 22% of the national average wage – $10,582 in 2015 – would receive a benefit equal to 90% of pre-retirement earnings even if they retire early."

Help clients make sure they don't outlive their money
Clients often ask how much money they need for retirement. But coming up with a specific number is not as simple as it sounds. The answer can be more gray than black and white because assumptions are needed, according to this article in Kiplinger. Here are some steps that can help. Determine if clients have saved eight to 12 times their final salary at age 65. And help them create a budget that accounts for all their needs and find ways to protect their portfolio from longevity risk. Clients should also put their fiscal house in order, use the right tools to curb uncertainty in their portfolio and avoid losing retirement money at all costs.

3 common mistakes of mandatory IRA distributions
Retirees who reach the age of 70 1/2 should make sure that they take the required minimum distribution from their traditional IRAs to avoid a hefty penalty, according to this article on Forbes. Those who hold multiple traditional IRAs need not take a distribution from each account, as long as they take at least the minimum RMD amount. It is also important for retirees to have invested their IRA assets wisely so they can preserve the principal after taking the mandatory distributions.

Get ready to retire at 50, not because you want to but because you'll have to
People may be compelled to retire before reaching the age of 65, as changing consumer preferences and other factors prompt more companies to drop older employees who command higher salaries for younger, educated and less expensive workers, according to this article on CNBC. More job positions are also becoming redundant because of technology, and the trend is expected to accelerate in the future. Increased longevity could lead to an excessive labor force while fewer jobs are being created, and this would force older workers to leave their posts to give way to their younger counterparts.

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