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

New Survey: Americans OK with tax hikes to protect Social Security

Nearly 60% of respondents in a study by the Pew Research Center voiced opposition to reduce Social Security benefits, while 12% were in favor of increasing benefits by phasing it out as a government program, according to this article on Forbes. In another study by the National Academy of Social Insurance, 71% of respondents backed a proposed solution package that includes scrapping the current $117,000 cap on the amount of wages subject to tax, and increasing the Social Security paid by employers and workers from 6.2% to 7.2%, COLA adjustments, and minimum benefits. –Forbes

What older workers can and can’t do with their 401(k) plans

Seniors are allowed to continue contributing to their 401(k) plans if they are still working, according to this article on MarketWatch. While they are also not compelled to take a required minimum distribution from the plan as long as they work and continue to contribute to it, clients will be required to take an RMD from plans with previous employers, traditional IRAs, and Inherited IRAs or Inherited Roth IRAs. RMDs from these accounts are computed separately and deducted from each account individually, except for traditional IRAs. –MarketWatch

401(k) investors are ‘so dumb’: Pro

Many individual investors started changing asset allocation in their portfolios by shifting into bonds and abandoning stocks as the market showed signs of volatility, according to a study by Aon Hewitt. Ric Edelman of Edelman Financial Services called such a market reaction a "dumb" move. 401(k) participants and other clients who are investing for retirement should consider buying stocks instead of selling when the market declines, as it is the time the stocks are trading at discounted prices, Edelman says. –CNBC

401k News: Contribution limits will increase for 2015

The limit of 401(k) contributions has been increased from $17,500 to $18,000 for next year, with additional catch-up for participants aged 50 and above rising from $5,500 to $6,000, according to this article on The Motley Fool. Workers can have $1 million in their nest egg if they contribute aggressively in their 401(k) plans, as the money grows by compounding over time. For example, clients who are in their 20s can contribute $18,000 annually and reach the $1 million mark in 43 years with the average compounding rate of 10%, while those in their 50s can have the same savings if they set aside $24,000. –Motley Fool

Asset allocation for retirement

While target-date funds and annuities are products that can help Americans improve their retirement prospects, clients should remember that not all of these products are good options since some of them charge very hefty fees, according to this article on Forbes. Clients can succeed in retirement investing if they have an adequate understanding of asset allocation. By knowing how to allocate assets wisely, clients can manage their own investment portfolios, avoid paying management fees, and enable their assets turn in the income they need while rebalancing their stock assets to offset inflation. –Forbes

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