Our daily roundup of retirement news your clients may be thinking about.
Clients can take an early retirement and withdraw from their accounts without paying any penalty if they opt for a substantially equal periodic payment program in their pre-tax IRA and 401(k) plans, according to an article in U.S. News & World Report. Early retirees also can withdraw from their 401(k) plans without any penalty if they are at least 55 and they also have access to their Roth IRA accounts any time they want. Another strategy for early retirees to take penalty-free withdrawals is to convert pre-tax money to a Roth account and withdraw from it after five years. Opening a taxable investment account is also a good option for those who want to retire early since withdrawals are allowed in such an account without any fine. DailyFinance
Divorced spouse benefits, payments for an eligible worker's child, disability payments and survivor benefits are among the lesser-known strategies that people have to get Social Security benefits, according to this article on MarketWatch. Clients who started collecting benefits have the option to undo the claim by withdrawing their application and returning all the payments they received. Retirees may also opt to suspend their benefits from their full retirement age until they reach the age of 70, while those who entitled to two benefits may start collecting one of the benefits and switch to the other when they turn 70. MarketWatch
Medicare Advantage payments to insurers providing private plans are expected to climb by 1.25% in 2016, with insurers' total revenue rising by about 3.25%, according to estimates by the Centers for Medicare and Medicaid Services. The estimates are contrary to the agency's proposal in February, which indicates that payments would drop by 0.95% while insurers' revenue would increase by about 1.05%. The revision is based on changes in the estimate of the increase in the program's spending, says Sean Cavanaugh, CMS deputy administrator, adding that it is a result of "modest and reasonable adjustment to plan payments." The Wall Street Journal
401(k) participants with median income are expected to pay $138,336 in fees throughout their lifetime, with those in the high-income group paying as much as $340,147 based on estimates by the Center for American Progress. A study found that hefty fees do not guarantee excellent performance and high returns for 401(k) participants. To know if they are paying too much in 401(k) fees, clients need to determine their expense ratio by getting the sum of all the fees for a given account and dividing it by the value of the holdings. If the ratio is close to 1.88%, then the fees are exorbitant. The Motley Fool
An annuity is a good option for clients who want to get protection against the longevity risk, according to this article on Forbes. Such coverage is recommended for those who need some flexibility, prepare for costs of long-term care and want to simplify their finances in their advance years. Investors who want a replacement for other lost income sources and guaranteed income stream may also find annuity products useful. Forbes
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