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

Unpacking the 4% Rule for Retirement-Portfolio Withdrawals
Retirees need to understand the assumptions behind the 4% withdrawal rule so they can use it successfully, according to this article on Morningstar. The term "withdrawal rate" may not be accurate since the 4% could be provided by income generated by bonds and dividends, capital gains distributed by mutual funds and sale of securities. Yet, the 4% withdrawal rate will not be always sustained through asset allocation especially if investors are ultraconservative. A right mix of stocks and bonds is most likely to provide sustainability in the long term. -- Morningstar

Bond bears are right — and wrong
Investors who are intensely into bonds are right when they say that the increase in interest rates will lead to a decline in the bond prices, writes Paul Merriman of MarketWatch. However, they are wrong in thinking that the trend should prompt them to sell bonds or avoid investing in these products, as this view would result in unnecessary losses. Instead of asking what to do with their bond investments amid the dwindling bond prices, investors should aim for long-term asset allocation based on historical data, Merriman says.  -- MarketWatch

Here’s the only state where retirees have enough income
Nevada is the only state where people aged 65 and above get more than 70% of their pre-retirement income, based on a study from Interest.com. In the District of Columbia, the average income for retirees is 74% of their income before they retired, while retirement income in Hawaii, Arizona and Mississippi was 68% or higher, the study also finds. The national median income for seniors is 60% of the median income posted by workers in the 45-64 age group.  -- Time Money

3 biggest risks every retirement saver should know about
One of the three risks that clients need to understand when investing and retirement planning is investment risk, which refers to volatility of stocks and funds, according to this article on CNNMoney. The two other risks are shortfall risk, which measures the probability of missing a goal, and emotional risk, which denotes investors' inclination towards making decisions based on emotion or impulse. Read more about these risks as well as advice on how to address them.  -- CNNMoney

The pros and cons of cash balance pension plans
Older business owners stand to benefit from cash-balance plans, which can be used to boost their nest eggs, according to an article on Kiplinger. Holding a cash-balance plan enables 401(k) participants to reduce their taxes, while contribution limits increase as plan holders age, giving them the chance to save more for retirement through the years. However, for pension participants, converting to cash-balance plans means a significant cut to benefits, as their lowest earnings will be included in computing the benefit from these plans.  -- Kiplinger

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