When retiring early is not a choice: Retirement Scan

Our daily roundup of retirement news your clients may be thinking about.

When retiring early is not a choice
Despite the common mantra of waiting until 70 to apply for Social Security, many people are unable to delay their retirement benefits that long because of poor health, limited job prospects and shorter life spans, according to this article on The New York Times. To work longer requires good health and good job prospects. People who are in low income groups are more likely than their high-earning counterparts to suffer serious health problems, lose jobs and face a shorter life span compared with high-earning people, reducing their ability to defer their retirement benefits for greater benefit value. Indeed, to really come out ahead from delaying Social Security requires a client to live into their 80s; otherwise, they would generally better off taking a reduced benefit earlier and collecting for as long as they live.

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Social Security checks are printed at the U.S. Treasury Philadelphia Finance Center in Philadelphia, Pennsylvania on February 11, 2005. Photographer: Dennis Brack/Bloomberg News

From millennials to boomers, what to do now for retirement
People who are in their 20s and 30s should take advantage of their employer match contributions in their 401(k) plans, have an emergency fund that can cover three to six months of living expenses, develop good investing behavior, and get adequate life and disability insurance to improve their retirement prospects, according to this article on NerdWallet. Clients who are in their 30s and 40s are advised to raise their retirement savings to 15%-25% of their income, roll over old 401(k) assets into an IRA, and enhance their professional skills to boost their earning potential. Those in their 50s and 60s may start making projections of their retirement finances, including their final salary and final savings account, to determine they are financially prepared to retire.

The 5 best states to retire to that AREN’T Florida or Arizona
While Florida and Arizona are popular retirement destinations because of low taxes and warm weather all year round, seniors who want to relocate after they retire should also consider South Dakota, Kentucky, Wyoming, Virginia, and Utah, according to this article on USA Today. These states can also be a good place to retire because they offer amenities that support the lifestyle that retirees want. “When you dream of retirement, you’re probably not dreaming about the tax code,” says an expert.

How planning to work in retirement can backfire
Although a survey has found that most seniors intend to continue working past their retirement age, many of them may be unable to work as planned because of illness, downsizing, and family responsibilities, according to this article on Money. Results from a study show that three in 10 of seniors who opt to work in retirement leave their jobs early. Young workers will have more options by the time they retire if they start saving early and take advantage of the power of compounding, as they have a long time ahead to grow their savings.

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