How to cope with Social Security's tiny 2017 raise
Retirees may want to find ways to reduce their living expenses so they can cope with the small increase in their Social Security benefits next year, according to this article on CBS Moneywatch. They may also want to look for other income sources, such as renting out a room in their home, taking a reverse mortgage or going back to work. Buying an annuity also helps to ensure their living expenses are covered throughout the golden years.
How to prepare for a Roth recharacterization
Recharacterization is an option for IRA investors to undo their Roth conversion and convert the assets again to make the most of their financial situation and market trends, according to this article on Yahoo Finance. Investors are better off keeping their retirement assets in a traditional IRA if market performance remains strong. Converting traditional IRA assets into a Roth is a good strategy to enhance after-tax income in retirement and to prevent taxation on a bigger portion of Social Security benefits.
Retirees are working in more hipster fields thanks to the gig economy
Aside from younger workers, retirees are also benefitting from the job opportunities offered by the gig economy, according to this article on MarketWatch. These alternative jobs require flexible working hours, attract older workers who have free time and want to remain active in retirement. “It’s a great deal in particular for older adults looking for something not quite full-time employment but keeps them active and engaged in the job market,” says an expert with the Pew Research Center.
Ask Larry: Filing for divorced spousal benefits early can wipe them out
A 63-year-old client is entitled to a divorced spousal benefit, as her former spouse is already more than 62 years old and they have been divorced for at least two years, according to this article on Forbes. The client can file even if her ex-spouse is not collecting his own retirement benefit. Those who seek a divorced spousal benefit before reaching their full retirement age are deemed to have filed for their own retirement benefit and they will get excess divorced spousal benefit, which could be zero if their retirement benefit is bigger than the spousal benefit.
Annuity illustrations aren’t always what they seem
Financial advisors should be careful with illustrations when explaining annuities to their clients, as these illustrations may offer inaccurate projections, according to this article on CNBC. "Annuity illustrations can be misleading because they can be very complex products," says a financial advisor. "There are so many moving parts that often brokers have a difficult time fully understanding the product, let alone illustrating it properly."
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