Our daily roundup of retirement news your clients may be thinking about.
The period between the time of retirement and the age of 70 creates a window of opportunity for seniors to boost income and minimize the tax bite on future income, writes an expert on The Wall Street Journal. For example, this period allows seniors to be more strategic about generating income from their portfolio. Using after-tax savings to cover the tax bill for Social Security benefits and other income is a strategic move to avoid increasing their taxable earnings and reduce the percentage of taxable benefits. During this period, a Roth conversion is recommended as they are likely to move to a lower tax bracket, which also means a lower tax bill on the converted amount.
Investors who want to include annuities in their portfolio have a number of annuity types to choose from, writes an expert on Kiplinger. Those who consider buying an annuity should make their decision based on their retirement goals and income needs, the expert writes. "Annuities can be attractive to investors who want to protect some of their portfolio from another serious market downturn. They can also be attractive for people in need of dependable cash flow."
An expert with Vanguard says that there are various target-date funds that cater to different financial circumstances and retirement goals at different points in their life cycle, according to this Q&A article on Morningstar. An equity-heavy, diversified asset allocation is recommended for younger clients who are in the accumulation phase, the expert says. "But as you get closer to retirement and into retirement the uniqueness or the heterogeneity of circumstances, objectives, preferences of individual investors disperse and the efficacy of a one-size-fits-most product, we still think it's an appropriate solution for investors."
Data from the Insured Retirement Institute show that 76% of baby boomers are concerned about the possible cuts to Social Security benefits if the program's financial woes will be left unaddressed, according to this article on personal finance website Motley Fool. To prepare for this risk, clients should boost their savings by contributing more to their retirement plans and working past their retirement age. Moreover, delaying Social Security is also a great strategy, as it will result in higher benefit payouts.
