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Retiree do's and don'ts in a rising-rate environment

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

Retiree do's and don'ts in a rising-rate environment
Retirees who want to protect their portfolio from interest rate increases are advised to opt for investments with the highest cash yields, according to this article on Morningstar. Clients should also avoid holding more cash in their portfolio in the long term, and they should perform a stress test to gauge the impact of rate increases on their investments. They should also shop around for the highest cash yields. They should also bear in mind that individual bonds may be better options amid rising interest rates and paying off debt can be a smart move, especially clients will see greater savings because of the tax reform.

Social Security shortfall: Higher taxes, reduced benefits to come?
The financial woes of Social Security and Medicare might prompt lawmakers to raise the payroll tax to ensure that future retirement benefits will be paid in full, according to this article on Fox Business. A 2.78% increase in payroll tax could help fund Social Security for 75 years, based on a report from the program's trustees. Another option would be to make changes such as rising the retirement age or reduce the cost-of-living adjustments.

If you're in your 50s, here's how to get serious about planning for retirement
Financial advisors want clients to step up their savings and pay off debt especially if they are already in their 50s, according to this article on CNBC. "Sometimes people don't really know how to assess their future needs and don't want to talk about it," says certified financial planner. "But a lot of times there are opportunities at that age to really move the needle on your retirement planning."

Lump sum or annuity? How to make the right pension choice for you
Instead of getting a lump sum payment from pension plan and face a hefty income tax bill, seniors have the option of rolling the distribution over into a traditional IRA, according to this article on Motley Fool. This option will enable them to keep the money in tax-deferred basis and will take on the tax bite when they start taking distributions in small amounts. Moving the money to a regular taxable account will only trigger a taxable event and even push clients to a higher tax bracket.

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