6 tax questions to ask before your client retires: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
6 tax questions to ask before you retire
Retirees are better off taking withdrawals from their retirement accounts in their 60s so they spread out their tax liability instead of being forced to get required minimum distributions by age 70.5, which could increase taxes due, according to this article on U.S. News & World Report. Retirees should also note that a maximum of 85% of their Social Security is taxable if the benefit is more than $44,000. Also, they should defer extra payments until January of their first full year of retirement because they would be in a lower tax bracket by then compared to their last year of work.
The talk you and your spouse need to have about retirement
Clients who are in a relationship should take time to form a retirement strategy with their partner to be able to maximize their retirement income, according to Forbes. One important issue to consider is the couple's retirement age, which could significantly affect health insurance premiums and benefits under Social Security. Clients should also plan around the potential retirement benefits they can receive as well as healthcare benefits in retirement. Clients should also plan for expected caregiving duties for relatives and possible financial aid given to their adult children, both of which can significantly reduce their retirement funds.
The 10 most important years of your financial life (& how to prepare for them)
Clients should view the five years before they retire and the five years afterward as the most important years of their financial life, as a significant loss during that period has a greater effect on their available retirement funds, according to Kiplinger. To better prepare for this period, clients should determine their current financial situation and then talk with their Human Resources department to form a retirement plan, with considerations on their living situation in retirement, their activities and the money they would need to be able to support their lifestyle. Clients should also get out of debt and ensure a diversified portfolio.
Is $1.5 million in savings enough to retire?
When saving money for retirement, people should consider several factors including their short-term and long-term plans, lifestyle, health care expenses and the place where they would be spending their retirement as cost of living varies by location, according to this article in Washington Post. It is important to consider out-of-pocket health expenses, which is estimated to cost $250,000 for a 65-year-old couple, when deciding retirement lifestyle. The decision on when to claim Social Security is also critical as every year of delay will result in roughly eight percent more income.
5 things to know about your Social Security statement
The Social Security Administration has stopped mailing Social Security statements to people below 60 years old this year, and this means that younger people must create an online account if they want to know their earnings history or the taxes they've paid, according to this article in MSN. People must make it a habit to check their online Social Security statements because it contains important information such as how much they will receive upon retirement, how much they will get if they become disable in the coming year, and the amount of money their family will get once they pass away. Aside from their earnings record, people can also verify their Social Security and Medicare contributions using the online statement.