Our daily roundup of retirement news your clients may be thinking about.
Retirement savers are advised to remain calm amid the Fed's decision to raise interest rates. This article in USA Today gathered opinions from several experts to get their insights on this. The first bit of advice was "do nothing." Beyond that, some other experts suggested buying more stocks and insurance for their investment portfolio, as well as laddering CDs, bond and annuity contracts. Also, clients are told to take caution when investing in real estate and minimize or eliminate debt costs. --USA Today
Clients want more security? Dump the budget and save automatically
A survey by the Pew Charitable Trusts finds that having a monthly budget prompts people to spend more and save less, making them feel less secure financially at the end of the month. Also, “there’s an enormous gap between what people think they should save and what they have been able to save,” says Clinton Key, the firm's research officer for financial security and mobility. People will be more secure financially if they set short-term savings goals by automating contributions to a savings program. --Forbes
Using Roth IRA earnings for a first-time home purchase
Parents who want to give a cash gift to an adult child to help fund a first house may advise their child to use the money to open a Roth IRA. The child will not face any tax and penalty when taking withdrawals from the account if the money will be used to buy a first home. The child's adjusted gross income should be below $183,000 in 2015 or $184,000 to be able to make Roth IRA contributions of up to $5,500, and has until April 15. --Los Angeles Times
Just for fun: Toys with a better rate of return than a 401(k)
Lego and other toys have performed better as investment than some stocks and other investment options. According to Mashable, Star Wars action figures, My Little Pony and Original Gameboys have appreciated in value more than other investments. To be clear, this article in Time Money starts with: "It's not a good strategy for investing, but it's cool when toys appreciate." It also gives the practical advice of leaving the toys in their packaging if being used as an investment.
Should clients refinance their mortgage near retirement?
Clients who are approaching retirement may consider refinancing their home mortgage if such a move gives them a lower monthly payment and recoups their investment sooner than expected. Refinancing a mortgage can be a good option for people who have 10 years before retirement if they intend to continue living in their current home after retirement. Those who are three years away from retirement may be better off with their current mortgage if they can pay the monthly payments or expect to pay off mortgage after retiring. --The Motley Fool
- When it Makes Sense to Reverse an IRA Conversion
- New Need-to-Know Liability Concerns for Retirement Advice
- Feds Chasing Small Savers With New Plan
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