Our daily roundup of retirement news your clients may be thinking about.
Do target-date funds make sense? Undoubtedly maybe
Target-date funds could be an ideal investment product solution for certain people such as those who began saving for retirement but don't know how to invest and those who are unlikely to periodically rebalance their portfolio and adjust their asset allocation, according to this article on Forbes. But TDFs, which usually come in ETFs or mutual funds, don't address major retirement considerations such as the cost of funding a comfortable retirement and a person’s savings rate. TDFs could be a great vehicle for investors seeking a “set it and forget it” approach to funding retirement, but it can't replace a retirement plan built around one’s specific circumstances.
How to max out your Roth IRA in 2018
The tax advantages and possibly lower fees of Roth IRAs compared with employer-sponsored plans should entice clients to max out Roth IRAs, according to NerdWallet. Roth IRAs allow for growth of earnings tax free, and no income tax is imposed on withdrawals upon retirement. Clients need to envision their future and set manageable contribution goals to maximize contributions to Roth IRAs.
The taxation of Social Security benefits has created quite the dilemma
Tax on Social Security benefits should be removed but Social Security’s anticipated budget shortfall and the federal deficit expected from the Trump administration’s GOP tax law means the government needs as much tax revenue as possible, according to this article on Motley Fool. The elimination of Social Security tax, which is based on income thresholds that have not been adjusted for inflation for 35 years and is now impacting 56% of households, would increase the monthly pay of middle-income retired workers.
5 steps to take 5 years before retiring
Retirement requires a lifetime of saving and planning and to ensure that pensioners enjoy the fruits of their labors, a five-step action plan is required, according to MarketWatch. The phased actions require managing one's financial portfolios, establishing social resiliency, break down existing mindset about the future regarding cash flows, diminish debt and prepare one's self psychologically for the opportunities that will come by creating a vision for the future and its financial implications. Of course, consulting a financial advisor who has worked with retirees or pre-retirees before actual retirement is one of the best ways to ensure these five steps are taken care of by a professional.
3 big money mistakes to avoid in retirement
More seniors are living longer past the age of 90 and retirees should be able to make sure that their nest eggs will be able to keep them comfortable for at least 20 to 30 years, according to this article on Money. There are three major financial gaffes that retirees should avoid, and those consist of starting to receive Social Security too soon, with experts suggesting pensioners push back their claim dates to the age of 70 instead of 62, disregarding the impact of inflation on investments and not planning or setting aside budgets for costs related to healthcare and long-term care.