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


Clients shouldn't count on inheritances for their retirement

A survey by HSBC Holdings finds that more pre-retirees intend to spend all their savings and leave nothing to their children than those who save as much as they can "to pass on to the next generation," according to this article on MarketWatch. Many respondents fear that leaving an inheritance will "take away the drive of the next generation to succeed," says HSBC's Brian Schwartz. "There is already talk in Washington about reducing the estate tax exemption to the levels that were in effect in 2009," so people think that giving away assets soon will be a good move, Schwartz says. –MarketWatch

These retirement saving 'rules' just don't add up

The 7% investment returns from stock market and the 4% withdrawal rule may not guarantee that retirees will have adequate nest egg throughout their golden years, according to this article on CNBC. Clients need to adjust their portfolio when they retire and move their assets from stocks to safer investments, so the 7% potential returns could be unlikely. The 4% withdrawal rule is now outdated because those hefty stock market returns of the past 30 years may no longer continue and returns from bonds and other safer investments are below historical averages. –CNBC


How clients can help their grandchildren with Roth IRAs 

Clients can help their grandchildren avoid incurring student loan by enabling them to open a Roth IRA, according to this article on Kiplinger. They can match their grandchildren's contributions, which could go up to $5,500 this year. Grandchildren can't claim a tax deduction on Roth contributions because of their limited earnings, but all the earnings will not be subject to tax if they withdraw the money when they reach 59½. Because of compounding, the money will grow tax-free. –Kiplinger

Most twenty-somethings are actually saving for retirement

About 67% of workers in their 20s polled by the Transamerica Center for Retirement Studies claimed that they are saving for retirement, with the youngest workers saving a median of $16,000, according to this article on CNNMoney. Twenty-eight percent of respondents in their 20s also contribute more than 10% of their pay to a 401(k) or similar retirement plan, the survey finds. However, nearly 20% of those who engage in retirement saving claimed they know "nothing" about investing and allocating their assets, with about 27% saying they were unsure how their money is being invested. –CNN Money

Social Security Q&A: Can I switch to full spousal after collecting early retirement?

A client who started collecting her own retirement benefit will receive an excess divorced spousal benefit if she files for ex-spousal benefit, according to this article on Forbes. The excess divorced spousal benefit would be zero if her full retirement benefit is bigger than 50% of her former spouse's full benefit. In case her former husband dies, she may apply for a divorced widow's benefit, which could be bigger than her retirement benefit. –Forbes

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