Why clients need more than one source of retirement income
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.
Why clients should have more than one source of retirement income
Having three sources of income can help clients secure their retirement, but only 6.8% of retirees have done so, according to a report from the National Institute on Retirement Security in this CNBC article. To create multiple sources of retirement income, clients with no access to workplace plans are advised to invest in an IRA, fund a regular investment account and join the gig economy. “Those who collect income from more income sources on the three-legged stool are much less likely to be poor, meaning they generate income below the federal poverty line,” according to the report. An HSA can also be a great vehicle to save for health care expenses in retirement because of its tax benefits, the article says.
New rules for retirement plan RMDs just got even more confusing
An increase in the RMD age for traditional retirement accounts under the Secure Act applies only to retirees who will turn 70 1/2 in 2020, according to this article in The Washington Post. This means that clients who turned 70 1/2 last year need to start taking the RMD from their IRAs and 401(k)s in 2019 and have until April 1 to take the first mandatory withdrawal. They may face a 50% tax penalty in case they fail to comply with this rule.
Clients may not have as much in their 401(k) as they think
The Secure Act has new provisions making it mandatory for 401(k) plan sponsors to give workers the estimated monthly income based on their account balances, according to this MarketWatch article. This is to help 401(k) participants determine whether they are on track in achieving their retirement targets, according to the article. “It helps people better understand how much money they have in their 401(k),” says an expert at the American Academy of Actuaries.
This simple thing can almost guarantee success in retirement
Creating a retirement budget can be the key to achieving a comfortable life in retirement, according to this Motley Fool article. A solid retirement budget will enable clients to have a good estimate of their future expenses, avoid overspending and prepare for contingency costs, according to the article. To create a retirement budget, clients should account for their basic living costs, including major expenses, such as travel and hobbies and plan costs that include health care, taxes and long-term care.