Almost 8 in 10 Americans favor Social Security benefit cuts: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
79% of Americans favor Social Security benefit cuts, new survey shows
A survey by the Program for Public Consultation School of Public Policy at the University of Maryland found 79% of Americans are in favor of raising a person's full retirement age to 68 from the previous 67, according to the personal finance website The Motley Fool. This would lead to benefit cuts for all recipients born after 1960 and could bring lower-income retirees below the poverty level. On the other hand, the strategy is likely to encourage seniors to postpone retirement and could push more Americans to save up instead of relying solely on Social Security benefits for their retirement funds.
Living longer is the greatest retirement risk for women
Female retirees should plan more carefully for the likelihood of a long life, which carries the burden of a larger retirement fund required to maintain a high quality of life, according to the New York Daily News. Risks for elderly women include the loss of their spouse, outliving assets, inflation, a decline in functional status and medical and healthcare expenses. These are potentially compounded by the generally lower earnings women make in their lifetimes owing to time spent in caregiving roles. A strong retirement plan includes computing for the cost of a retirement lifestyle to age 100 accounting for inflation, healthcare costs and others and creating strategies to bridge the gap between their current situation and their goals.
Pulling retirement cash, but not by choice
This year's wave of mandatory 401(k) withdrawals and their accompanying tax payments among retirees ages 70 and 1/2 or older will include the oldest of the country's baby boomer generation for the first time, likely affecting the stock market and the national economy, according to the Wall Street Journal. The amount of distributions is expected to increase significantly as the segment of the population age 70 or older increases to 60 million over the next 20 years. The outflow could force some asset management firms to offer more services or lower fees in a bid to encourage retirees to reinvest.
How a health savings account and an IRA are a powerhouse combination
Having a health savings account in combination with an IRA could significantly increase retirees' funds, according to Bankrate. People with certain high-deductible health insurance plans qualify for an HSA, and this allows them to save money without the required minimum distributions required in an IRA while also granting them a once-in-a-lifetime use of a rollover from their IRA in case of an emergency. Retirees with an HSA also may claim qualified medical expenses at any time, even years later, provided they keep the receipts, and may use savings from an HSA to pay off certain costs when applying for Medicare coverage at the age of 65.