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

Preparing small-business owners for retirement
Many small-business owners who are preparing for their golden years make the mistake of depending on the sale of their business to fund their retirement, as they usually overvalue their business, says a financial adviser. Another mistake they make is underestimating their personal expenses, a financial expert adds. Some small-business owners also fail to make use of financial products that can optimize their retirement savings, such as opening an individual 401(k) instead of an SEP IRA, an expert notes. -- Wall Street Journal

The $400,000 Social Security mistake
The country faces "a generational crisis of enormous proportions,” with Social Security being 33% underfinanced, said Lawrence Kotlikoff, a professor of economics at Boston University, at the House Ways and Means Committee’s Subcommittee hearing. The government needs to impose an additional 4.1% payroll tax to fix the problem, the expert said. Kotlikoff explained that the mistake lies in the current system's mechanism that allows retirees to increase the value of their benefits substantially by deferring their Social Security benefits.--Forbes

Generating Income in a Low-Yield World
Investors tend to put more assets in dividend stocks with higher yields to close the gap between investment returns and recommended spending, according to Fran Kinniry of Vanguard. However, clients are advised to have a total-return approach to reaching their targeted income, as having an income-driven approach could make their portfolio less diversified and could concentrate their assets in a certain way. This would result in assets having some equity link, putting their principal at risk.  --Morningstar

When conventional wisdom about retirement is good enough
The conventional wisdom in retirement planning is to have about 25 times the pre-retirement income when people start spending in their golden years, according to CNN Money. The assumption behind the advice is that the withdrawal rate is 4% and clients will live for at least three decades without outliving their nest egg. Despite inflation and other market trends, the 4% withdrawal rule is a rough but viable option, and aiming for a nest egg amounting to 25 times the needed retirement income is worth the effort, the article concludes.  --CNN Money

Retiree dilemma: How much to spend on grandchildren
Many retirees face the dilemma of supporting their grandchildren financially without draining their nest eggs. Grandparents who feel the need to help their grandchildren are compelled to delay their retirement or stay at work. Retirement savers are advised to consider their long-term needs and secure their future first if they plan to provide financial support to their grandchildren, an expert says. --USA Today

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