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A Social Security strategy for the wealthy: Retirement Scan

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

A Social Security strategy for the wealthy
Wealthy clients should include Social Security as part of their retirement income plan and leverage it as a tool in estate planning, according to this article on MarketWatch. That's because Social Security is a steady source of cash flow that could provide more than $1 million in lifetime guaranteed income. For example, although their benefits are reduced if they file early, they can direct the payments to fund life insurance that they can use for estate taxes, charitable gifts and leave as a legacy for their loved ones.
The trouble with target-date funds in retirement
Clients are advised to review their target-date funds when they retire, as some of these funds stop adjusting their allocation after reaching their target year, according to this article on Kiplinger. That is because the funds' stock-bond mix could not generate the returns that they need in retirement. Their risk tolerance change in retirement and the funds' glide path may not longer suit their circumstances. Another reason for scrutiny is that clients could gain more from a tax-efficient withdrawal strategy than keeping their assets in these funds.

An investing road map for pre-retirees
Clients who are in their 50s and 60s are advised to invest in themselves by taking advance courses if they consider an encore career after they retire, according to this article on Morningstar. The pre-retirement phase is also the right time to start creating a good Social Security claiming strategy, shore up their safety net, and evaluate their retirement portfolio. Clients should also consider socking away more money in their tax-sheltered plans by making catch-up contributions and develop a withdrawal strategy that will enable them to minimize the impact of taxes on the distributions.

A majority of millennials may very well outlive their retirement savings
A recent survey suggests that millennials are likely to outlive their nest egg after they retire, according to this article on Motley Fool. The survey also found that $1 million in retirement savings won't be enough to support millennials through the golden years. This finding could be a cause for concern, as financial woes could force Social Security to cut future benefits.

What investors need to understand about ‘investment return’
Investment returns can be measured in various ways, but the task can be very challenging for investors, according to this article on The Wall Street Journal. According to an expert with the CFA Institute, these measures of returns are “full of jargon and difficult for folks to understand sometimes.” Knowing the arithmetic average and geometric average allows investors to better understand these measures, including time-weighted and dollar-weighted return measures, which are commonly used by investors and advisers alike.

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