Trump budget cuts programs for poor while sparing seniors: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
Trump budget cuts programs for poor while sparing many older people
President Donald Trump's budget is expected to call for spending cuts on programs intended to help poor households, while keeping Medicare and other programs designed to assist older people, according to this article on The New York Times. The budget cuts to these programs would encourage the poor to work and depend less on government aid. “We are no longer going to measure compassion by the number of programs or the number of people on those programs,” says White House budget director Mick Mulvaney. “We are going to measure compassion and success by the number of people we help get off of those programs and get back in charge of their own lives.”
A big Social Security change is coming in 2020, and you probably aren't aware of it
Social Security is expected to deplete its excess funds worth more than $2.8 billion by 2034 and will be forced cut benefits by up to 21% to guarantee payouts through 2090, according to this article on Motley Fool. The program is also expected to see its benefit payouts exceed its revenue starting in 2020, and will have to draw from its excess cash to close the gap.
Millennials are saving for financial freedom -- not retirement
A study by Bank of America and Merrill Edge has found that, unlike the older generations who save to prepare for retirement, millennials are socking away money in their savings accounts to achieve financial freedom, according to this article on Yahoo Finance. “Young adults tell us they are willing to do whatever it takes to achieve freedom and flexibility, even if it means working for the rest of their lives,” says an expert with Merrill Edge.
Ask Larry: Can I suspend retirement for widower's benefits?
A retiree who is on Social Security cannot stop his retirement benefit and just collect a spousal benefit on his deceased wife's record, according to this article on Forbes. While he is allowed to suspend his own retirement benefit, he can only collect an excess widow's benefit, which could be zero if his own benefit exceeds his spousal benefit.
Family finances: Rolling over a 401(k) into an IRA
Workers are better off rolling over their 401(k) assets with their former employer into an IRA if the workplace retirement plan offers high-cost investments, according to this article on Chicago Tribune. An IRA rollover is also a good move for workers who want to avoid holding overlapping funds in multiple 401(k) plans. Transferring the 401(k) assets to an IRA is also recommended if clients want to increase their bond investments and to gain flexibility for withdrawing the funds.