What to do if an employer switches its 401(k) provider: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
What to do if employer switches 401(k) providers
Many 401(k) plans are switching providers as employers prepare to comply with the Department of Labor's new fiduciary rule, according to this article on Forbes. When it happens, workers should ask their employer about its decision, and ensure they know the key dates of the transfer, such as the last dates for request involving rollovers and contribution changes. Workers should also review their new statement and make sure the full amount of the transferred assets is accurate, and they have the option to pick a new fund that reflects the asset class makeup from their old fund.
Special needs families face special retirement planning challenges
Retirement planning can be more challenging for people who have family members with special needs or disabilities, as they need to balance their retirement saving and their loved ones' long-term needs, according to this article on Money. Some of the major retirement planning challenges that these people face are developing a plan to provide the care of a family member who has disability or special needs, accounting for future cash flow needs, and deciding on investment allocations for assets intended for the family member, says a certified financial planner. They should also adopt a more conservative approach to investing, as "there needs to be enough cash there that if the market plunges, there are resources to meet immediate needs, and for the portfolio to recover."
Do client really know what their retirement income will be?
Guaranteed lifetime benefits are considered the largest assets that clients can have to fund retirement, according to this article on MarketWatch. Aside from pensions or defined-benefit plans, Social Security and annuities are also sources of this type of benefits. When evaluating pension-type benefits, clients should check the number of beneficiaries covered by the pension, the start and period of guaranteed benefit payouts, and any inflationary adjustment of the benefit payments. The article provides multipliers to help clients estimate their future pension benefits.
Three things to do when turning 70
Retirees are advised to check the tax-deferred retirement accounts when they turn 70, as they have to take the first required minimum distribution in the year they reach 70 1/2, according to this article on CNBC. They could face a hefty penalty if they fail to take the distribution. They are also required to start collecting their Social Security benefits if they haven't filed for the benefits. Reaching the age of 70 also offers an opportunity for retirees to review and re-balance their investments for investment growth. "One thing to consider is longevity. The chances of you living into your 90s is greater because you've already reached age 70. Some allocation to stocks is a way to maintain purchasing power," says an expert.
For investors and retirees worried about the election
Retired investors should adopt investing strategies that will protect them from market downturns so they will not worry about the adverse impact of events, such as the national election, on their portfolios, according to this article on CBS Moneywatch. One strategy is to create guaranteed sources of retirement income to pay their monthly bills and other expenses. This will also give them the confidence to invest their other assets to generate funds for travel, hobbies and other discretionary expenses.