Our daily roundup of retirement news your clients may be thinking about.
A report from lawmakers on the Joint Economic Committee states that Social Security is being threatened, and the federal government should consider modernizing and enhancing the program, according to this article on CNBC. "Cuts to Social Security are not a credible solution to pay for the $1.9 trillion that Congressional Republicans have recently added to the deficit in passing their tax legislation," said Sen. Martin Heinrich, D-N.M., in a statement. "We must ensure that our seniors are able to retire with dignity."
Many seniors make the mistake of not preparing a will while they are still alive or not preparing for the possibility of becoming disabled or incapacitated, according to this article on MarketWatch from an outside contributor. They also opt to prepare important documents without professional help and fail to make proper beneficiary designations for retirement and other accounts, increasing the odds of an estate planning fiasco. Seniors should review their estate plan and those who get married more than once should plan on how their estate will be divided after their death. They should also not withhold any information to their estate planner to avoid problems in the future.
Clients are likely to face bigger expenses in retirement thanks to rising health care costs, according to this article on personal finance website Motley Fool. HealthView Services estimates that a 65-year-old man would spend $189,687 in medical expenses through the golden years, while a woman of the same age could incur $214,565 in healthcare costs. These numbers do not include long-term care expenses, meaning seniors should save more than these amounts to cover their future medical expenses.
A study by the Employee Benefit Research Institute has found that seniors tend to underspend their retirement savings for fear of outliving their nest egg, according to this article on CBS Moneywatch. The research findings teach clients to consider working longer to delay their Social Security and withdrawals from retirement accounts to boost income in the golden years. Other ways to improve their retirement prospects include working on a part-time basis and creating a new income stream by tapping their home equity.
The IRS has announced that the health savings account contribution limit for family coverage will revert to the original $6,900 after its March ruling reducing the threshold to $6,850, writes a Forbes contributor. Clients who qualify for an HSA are advised to take advantage of the opportunity, writes the expert. "You get a triple tax break. It saves you money even if you pull funds out to pay for health care expenses right after making contributions. Even better: Use the investment option to save for future healthcare expenses in retirement."
