How to handle Medicare if clients are working at 65
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
Here’s how to handle Medicare if clients are still working at age 65
Seniors working for big companies have the option to delay Medicare without penalty and stick to their group health insurance plan once they reach the age of 65, according to this CNBC article. These clients may also prefer Medicare and give up their company coverage, or use both, according to the article. “The advice I give is to calculate the financial impact for each option,” says an independent broker and general agent for Medicare plans. “Figure out your cost based on your usage and your medication, and do a comparison on what your outlay may be.”
Why the American dream of retirement isn’t going to be fulfilled
While many advisors tell retirees to keep some of their assets in risky investments in order to continue generating returns and support a longer retirement horizon, former hedge manager Raoul Pal says otherwise in this article from MarketWatch. "What happens if equities fall? That is a ludicrous discussion if you don’t take into account the risk," Pal says. "The probability of volatility in a recession can rise dramatically, so it can turn to a massive loss. Someone in their 30s has plenty of time to build their asset base, but for someone who is 60, that is irresponsible."
Should your client pay off credit card debt with a 401(k) loan?
Taking a loan against a 401(k) plan can be a great option for clients to pay off their credit card debt, as long as they are aware of the drawbacks of such an option, according to this article in Fox Business. Aside from owing interest on the loan, borrowers would miss out on the opportunity to earn from the money if the funds are left in the plan. They will also owe income taxes and face an early withdrawal penalty if they fail to repay the loan on time, according to the article.
This trend is quietly derailing your clients’ retirement plans
Lifestyle inflation is one factor that keeps many clients from achieving their long-term savings goals, according to this article in Motley Fool. To avoid this, clients are advised to stick to a budget, save salary increase and other windfall in tax-favored accounts, such as 401(k)s, Roth IRAs and HSAs. A taxable brokerage account is another place to consider once they maximize tax-advantaged accounts, according to the article. Clients may want to upgrade their lifestyle once they have a budget and save their salary increase.