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

7 common Social Security myths
Many people have the misconception that Social Security will become insolvent over the next 20 years, according to this article on Kiplinger. It is also wrong to think that they will owe no taxes on their retirement benefits, that they will not collect all their contributions to the system, or that they will not get their fair share if they fail to start collecting their benefits early. Raising or scrapping the payroll taxes will not help address the program's financial woes, while Social Security will repay the loss in benefits that working retirees incurred because of the earnings test when they reach their retirement age. Retirees can also undo their Social Security application within 12 months since they applied for the benefits.

Bloomberg News

Retirement plans are among the fee-stricken
Defined contribution retirement plans are not helping Americans prepare adequately for their golden years, according to this article on Bloomberg. Many workers in their 60s who have been with their employers for at least 30 years hold just $274,000 in their 401(k) plans, way lower than what they need to secure a comfortable retirement. Most of 401(k) plans offer more than enough investment options in their menus and charge excessive fees, making these plans ineffective as a savings vehicle for retirement.

Self-directed retirement savers may hit hurdles when seeking help
Although self-directed IRA investors will act as their own fiduciaries, providers are expected to refrain from giving return rates and other information to these clients, as it could construe as an investment advice under the new Labor Department rule that imposes fiduciary standard on advisers providing guidance on retirement accounts, according to this article on The Wall Street Journal. “Whatever the call center or the rep on the other side of the phone is saying, they have to stop short of making a recommendation,” says an expert.

How to know when downsizing your home makes sense
Downsizing may not always be a smart move for people preparing for retirement, according to this article on CNBC. For example, moving to a smaller home may not benefit seniors living in areas where home prices, taxes and insurance are low, as the decision will not lead to significant financial gains. Other considerations to make are estate planning and capital gains, which can offset the benefit of downsizing. Some retirees are better off aging in place. "It's more about rightsizing rather than downsizing. People often like where they live, and want to find ways to stay there," says a financial planner.

How to budget for retirement
Clients who are within five years before leaving the labor force for good should start preparing their retirement budget, according to this article on Forbes. To determine the amount of money they need to cover their needs in retirement, they may estimate the amount as 70% to 80% of their pre-retirement gross income, or they may develop a monthly budget. It is also important to account for the longevity factor, as the average life span has increased. When creating a detailed retirement budget, clients should identify the expenses that will continue and the ones that will disappear after they retire. Their spending is also expected to change from the early years to the later years of retirement.

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