Our daily roundup of retirement news your clients may be thinking about.
The best way to get guaranteed income in retirement
Clients who want to create a source of guaranteed income in retirement should opt for simpler annuities, which tend to be less expensive than those with more complicated terms, according to this article on CNNMoney. One option is an immediate annuity, which requires a lump sum payment in exchange for monthly payments right after they retire. Another option is a longevity annuity, which is the same as an immediate annuity, except that the monthly payments start at a much later date.
Taking required minimum distributions from a SEP IRA
401(k) participants who reach the age of 70 1/2 are allowed to defer the required minimum distributions, but the case is different for self-employed retirees who hold their savings in a SEP IRA, according to this article on Kiplinger. A SEP IRA is treated like a traditional IRA, meaning the account is subject to RMD rules, says an expert. The rules for computing the RMD amount for a SEP IRA are the same as those for traditional IRAS.
Should you take a lump sum or annuity for retirement?
Retirees who are torn between taking a lump sum or opting for an annuity may be better off taking a partial annuity, according to this article on MarketWatch. Such an option ensures that clients continue to get guaranteed lifetime income while investing a portion of their savings for dividend returns. “People should have the flexibility to decide how much guaranteed income they want,” says an expert.
Warning to baby boomers: Get creative or get depressed
Cash-strapped baby boomers are better off trying new things to enjoy the golden years than simply focusing on the traditional concepts about retirement, according to this article on Forbes. Seniors may want to get a part-time job, which can be less stressful and more flexible than a full-time job, or they may give up their big house for a duplex home and rent out the other unit to cover mortgage and other costs. They may also prefer cooking to eating out, using the library and other community resources to look for new recipes.
What can I convert or roll over to a Roth IRA?
Rolling over retirement assets into a Roth IRA is a smart move, as clients face no penalty for early withdrawals, according to this article on Motley Fool. The transfer triggers no tax liability if the money comes from a similar account, such as another Roth IRA or Roth 401(k), which are funded with after-tax dollars. However, converting assets from a tax-deferred retirement account, like a traditional IRA and traditional 401(k) is a taxable event, as the conversion involves pre-tax money.
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