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

How clients underestimate spending in retirement
When planning for retirement, people are more inclined to focus on the conventional wisdom that they'll need of 70% of pre-retirement income instead of the things they will need to give up because of the 30% cut, according to The Wall Street Journal. Behavioral economists call this tendency a framing effect. To avoid this, clients are advised to take a behavioral stress test and determine three expense categories that they will they will give up in retirement. These expenses should represent 30% of the pre-retirement income they will lose after they retire.  --The Wall Street Journal

Required minimum distributions and real estate are a tricky combination
Most financial advisors are not inclined to recommend a rollover of a traditional IRA to a special type of IRA custodian to enable retirees to invest the funds in real property investments, according to MarketWatch. The entire balance of the IRA can be subject to tax if retirees fail to follow the applicable rules. These rules can get even more complicated when retirees reach the age of 70 1/2 and will have to take required minimum distributions from the account.  --MarketWatch

Relocating in retirement? Examine the full tax picture
Property and income taxes should not be the only basis for clients to assess the tax implications of relocating to a certain state, according to Morningstar. Those who want to move in retirement are advised to know the whole tax picture of a state they are considering, and this includes other factors. For example, while real estate taxes are higher in Texas, property prices are less expensive than other states, increasing the potential tax savings that retirees can accumulate if they move to the state.  --Morningstar

Social Security: How does a disabled child qualify?
Clients can apply for Supplemental Security Income with Social Security for their disabled children who are below the age of 18, according to Forbes. They will need to submit a number of documents, including a Child Disability Report, which will be reviewed by the Social Security Administration. To qualify for the benefit, the child must be suffering from a serious physical or mental condition that has restricted or will restrict his or her activities for at least 1 year, or a condition that could lead to death.--Forbes

Where do your clients compare in retirement savings?
Although a recent survey shows that many Americans haven't saved enough for retirement, a majority of respondents remain confident about their prospects because they expect to receive benefits from Social Security, according to the personal finance website Motley Fool. While these benefits can cover basic expenses in retirement, future retirees should expect other major expenses, such as health care costs, which could eat away most of their retirement income. To avoid this scenario, clients are advised to use saving strategies, such as signing up in their 401(k) plan's automatic escalation program or stashing money in a health savings account.  --Motley Fool

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