How this classic savings strategy could increase taxes when clients retire
Clients should consider directing a portion of their retirement savings to a Roth IRA, according to this article on MarketWatch. A Roth IRA offers no upfront tax deduction but savings grow tax-free, withdrawals are tax-exempt, and the account is not subject to required minimum distributions. Clients who sock all their savings in a tax-deferred 401(k) plan will owe taxes at a higher rate when the funds are withdrawn in retirement. And they will also be forced to take RMD when they turn 70 1/2, which could inflate their taxable income and make a portion of their Social Security taxable.
An easier way to pass along assets after you die
Clients who intend to leave property to a family member may want to consider a joint tenancy arrangement, in which they co-own the asset with their loved one, writes an expert for Forbes. When clients die, the family member automatically assumes ownership of the property "regardless of what the deceased joint owner’s will or other estate plan documents provide," writes the expert. "Joint tenancy assets are in many respects a simplified, inexpensive version of an estate plan for an individual as they provide for the passing of assets without probate."
4 reasons not to retire before 66
Retirement before the age of 66 may not be a smart move for seniors who have a savings shortfall, according to this article on personal finance website Motley Fool. Seniors should also consider delaying retirement if they want to collect a bigger Social Security payout and their family has a history of longer life span. Having a rewarding career is another good reason for seniors to defer retirement until they reach their full retirement age.
4 questions to ask before adding an annuity to a retirement plan
Clients who want to include an annuity in their investment portfolios are advised to know the various products available to them and choose the annuity that costs less and best serves their retirement goals, according to this article from Kiplinger. They should also consult their financial adviser about the pros and cons of buying such an annuity. For example, while tax deferral can be an advantage, it could be an issue in the future when tax rates change.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access