6 myths about IRAs that clients can't afford to believe: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
6 myths about IRAs that clients can't afford to believe
Many people have misconceptions about IRAs, preventing them from using the savings vehicle to build their nest egg, according to this article on Forbes. For example, many workers think that they are not allowed to contribute to a 401(k), a traditional IRA and a Roth IRA in the same year, which is untrue. Another common misconception is that workers who earn “too much” money can’t contribute to an IRA. And while it’s true that workers can be ineligible to contribute to a Roth IRA if they earn “too much” in the IRS’ eyes ($133,000 for single clients, or $196,000 if they’re married and filing jointly). However, even high-earners are allowed to fund a traditional IRA. To be sure, it gets even more confusing because household income affects how much of someone’s traditional IRA contribution the IRS will allow them to deduct from their taxes.
Investing tips for clients in their 30s
Clients are advised to start investing as soon as they embark on a career, while those who are already in their 30s should get on track and max out their 401(k) contributions, according to this article in U.S News & World Report. "By the time you're in your 30s, you should have gotten a few promotions, and you might have a working spouse with whom you share household expenses," says an expert. "At this stage, maxing out your 401(k) plan -- to the full $18,000 in salary deferral -- should be a priority. In addition to building a long-term retirement nest egg, you'll take a major bite out of your federal income tax bill."
Older workers feel on track for retirement. Are your clients?
A survey has found that 59% of workers believed that they are ready for retirement, with 65% of the respondents saying they intend to add at least $100 to their nest egg over the next six months, according to this article on USA Today. “It’s encouraging to see people are starting to think about retirement,” says a certified financial planner. “Some people stayed out of the market and didn’t feel they wanted to invest because of the recession. Now people are starting to play catch-up.”
These countries are struggling the most to support their retirees
Many countries are underprepared to handle their growing senior population, as their labor force is shrinking at a faster rate, resulting in fewer workers supporting the rising number of retirees, according to this article on Bloomberg. The ratio of workers per retiree in the U.S. is 4.4 to one, with France, Singapore and other countries posting a ratio between 2.2 to 3.5. An aging population poses various challenges to advanced economies, says an expert. For instance, the U.S. has “very high health-care costs for all citizens.”