Medicare costs could rise by more than 200% for these retirees: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
Medicare costs could rise by more than 200% for these retirees
An analysis by HealthView Services has found that Medicare premiums will increase for high-income retirees because of the change in the income brackets that will serve as basis for determining these premiums for their Part B and Part D coverage, according to this article on CNBC. Retirees should avoid doing a Roth conversion in the two years before applying for Medicare, as the converted amount will be taxed and added to their modified adjusted gross income. Clients with high-deductible insurance plans are advised to open a health savings account for the tax benefits, but they cannot contribute to the account once they apply for Medicare.
Financial planning: How to determine if you need life insurance in retirement
Aside from income replacement and debt payments, life insurance is also a good tool to cover estate taxes and other tax purposes, according to this article on USA Today. Retirees have the option to buy life insurance using mandatory distributions from their IRAs as a strategy to leave a legacy to their loved ones, and to designate a non-profit organization as beneficiary of their retirement accounts, writes a certified financial planner. “This strategy allows a retiree to double the impact of their retirement account while eliminating income taxes on the retirement savings.”
72% of older workers worry they'll never collect Social Security. Are they right?
A study by the Nationwide Retirement Institute has found that 72% of workers aged 50 and older are concerned that Social Security would run out of funds by the time they start collecting benefits, according to this article on Motley Fool. However, this fear is baseless, as the program will not go bankrupt thanks to its revenue from payroll taxes. However, the program would deplete its trust funds in 2034, and this could result in reduced benefits for future retirees if Congress fails to act to fix the problem.
The retirement crisis no one is talking about
About 10,000 baby boomers are leaving the workforce for good every day, creating a tight labor market that could potentially become a problem, according to this article on Fox Business. Many companies are concerned that they cannot find qualified applicants to fill the positions vacated by baby boomers, while other firms had to raise wages and offer more benefits to lure qualified workers.
You might want to rethink this 'dead' retirement plan if you have a small business
Small business owners who are dissatisfied with the low contribution limits to 401(k)s and IRAs are advised to set up a defined benefit pension plan, writes a Forbes contributor. Not all small businesses will benefit from a defined benefit pension plan, as it could cost them at least $2,500 every year, writes the expert. "However, given the right set of circumstances, this is money well spent in order to get immediate tax savings that can far surpass a typical 401(k) plan."