Our daily roundup of retirement news your clients may be thinking about.
Signing up for Medicare while covered by employer’s health plan
Seniors don’t have to sign up for full Medicare coverage at age 65 if they’re still covered under an employer’s plan. But they do need to be mindful of enrollment deadlines, according to this Q&A article from Kiplinger. If they want to enroll in Medicare Part A, they’ll be given a seven-month window to sign up, which will begin three months before their birth month and end three months after that month. The start of the coverage will depend on the timing of their enrollment. For example, they can expect the coverage to take effect on the first day of their birth month if they enroll before reaching 65.
High-income earners can use this tax-friendly strategy to save for retirement
A backdoor IRA is a great option for high-income investors who want to boost their retirement savings, according to this article on CNBC. This strategy will enable clients to make nondeductible contributions to a traditional IRA and convert the funds into a Roth without owing income taxes. The new tax law makes this option a legitimate strategy, says a CPA. “More people are familiar with it and advisors, tax preparers and CPAs will be more comfortable recommending it to clients.”
Can Social Security benefits be garnished?
The U.S. government is allowed to garnish a portion of Social Security benefit payments if retirees have unpaid income tax bill, according to this article on personal finance website Motley Fool. Those who are also behind federal student loan payments can also expect a part of their retirement benefits garnished by the government. Clients are advised to make their tax and student loan payments on time to avoid having their retirement benefits garnished.
Why we should pursue passions in our 50s — not in our 20s
Clients will be better off pursuing their passions and interest in their 50s than in the early years of their careers, writes an expert on MarketWatch. That's because people may realize later on that they don't really want what they try to achieve and their passions become more important over the years, explains the expert. Moreover, "if we save when we’re young, our entire financial life will be easier."
Most in U.S. 'very likely' to work 2 years longer than planned
A study by the Indexed Annuity Leadership Council has found that three of five Americans are “very likely” to continue working for about two more years than they planned to achieve their retirement goals, according to this article on USA Today. What the cause of this? Forty percent of the respondents claimed that they failed to start saving early while 19% said they made wrong financial moves. Another 17% said that they failed to save enough, increasing the odds of a delayed retirement, the survey found.
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