Our daily roundup of retirement news your clients may be thinking about.
Dividend stocks beat bonds for retirement income
Stocks can be a good option to boost investment returns for retirees amid dwindling bond yields, according to this article in The Wall Street Journal. Retirees may use the money withdrawn from their portfolio to invest in stocks for their dividends. "If you put together a portfolio of good blue chips, you might start with a yield of 3%" noted one expert in the article. But you have to "train your brain to ignore the price movement," he says. "You want to focus on the income production and the growth of that income." --The Wall Street Journal
How to use Social Security to fix retirement inequality
Social Security can be used by the government to address retirement inequality by expanding the program's benefits to cover workers who need it the most, says Ben Vegthe, research director of the advocacy group Social Security Works. The government would cover the cost from the expansion by removing the limit on wages subject to payroll taxes, Vegthe says. The article also cites another possible solution: increasing savings option for workers. --Time Money
Tap your 401(k) to buy high-yield CDs?
Withdrawing money from a 401(k) to invest in high-yield certificates of deposit may not be a good option for retirees who have enough income to cover their needs, according to this article on USA Today. Even with rising interest rates, Bankrate.com says that the best rate on a five-year jumbo CD is 2.27%. A better option for those who are worried about rising interest rates is investing in a high-quality short-term bond fund in their 401(k) plans, an expert says. "That would be a better alternative, again assuming short-term fixed income is appropriate for you." --USA Today
3 key retirement numbers clients need to know
When talking to clients about retirement planning, advisors should discuss the proper withdrawal rate that suits their needs and savings, according to this article on MarketWatch. They also need to talk to clients about their reliance rate, which is the percent of their retirement income that will be coming from their investments. Finally, advisors need to discuss with their clients the right age to start collecting their Social Security benefits. --MarketWatch
10 immediate steps to start planning for retirement in your 40s
Clients in their 40s who want to start planning for retirement are advised to determine the amount of savings they will need to cover their needs through the golden years, boost their savings rate, and set aside the money for their own future, according to this article on The Motley Fool. They also need to pay down their debt, reduce spending and max out contributions to their retirement plans. Their retirement plan may include life insurance as a source of income in retirement, strategies on how to deal with their future finances and investments, as well as plan to delay their Social Security benefits as long as they can. --The Motley Fool
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