Why couples must plan for Social Security as a couple: Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
Why couples must plan for Social Security as a couple
Clients should work together with their spouses and plan as a couple to develop a Social Security claiming strategy that will maximize their retirement benefits, writes an expert on Kiplinger. For example, delaying retirement benefits could mean an increase in survivor benefits but spousal benefits could not exceed 50% of the spouse's full retirement age benefits, writes the expert. "In order to figure out the best time and way to take benefits, it’s essential to take into account pension streams, investments, employment, life expectancy and goals."
5 401(k) facts you didn't know
Retirement savers can contribute as much as $18,000 (or $24,000 for those 50 and older) to an employer-sponsored 401(k) plan, according to this article on Motley Fool. They can also qualify for an employer's matching contribution if they contribute enough, and they may have the option to sock away money in a Roth 401(k). Unlike in a traditional 401(k), a Roth 401(k) is funded with after-tax dollars, so withdrawals are no longer subject to tax in retirement.
A 401(k) retirement plan is not an option; it's a must for all companies: Op-ed
All small business owners should maintain a 401(k) retirement plan for their employees and also for themselves, writes an expert on CNBC. Contrary to what many employers think, the cost of keeping a 401(k) plan is relatively lower. For example, "[f]or a 10-participant company, administration costs can be less than $1,000 per year, and the government offers a tax credit of up to $500 for the first three years of the plan to help offset plan costs. Self-employed business owners can expect much lower costs, although the credit won't apply."
Do's and don'ts for beneficiary designations
Clients are advised to account for the benefits accorded to spouses named as beneficiaries in a 401(k) plan, IRA, taxable and other accounts, according to this article on Morningstar. Spousal beneficiaries usually get better tax treatment, and can roll out their inherited assets directly into their own accounts. Clients may also designate a charity as beneficiary for a certain portion of their assets, as charities are exempt from tax liability on the gain.
Three things I should have said about retirement planning
Although working longer could help boost people's retirement benefits, some older workers may not have the stamina to stay on the job longer that planned, writes an expert on The New York Times. While some expense items, such tuition and child-rearing costs, are no longer on the budget list of most seniors, the money they could have saved might go to other financial obligations, such as home repair, writes the expert. "Based on what I know now, I have put an addendum on the retirement advice I give to people: 'And no matter how much money you think you are going to need, save another 15 percent, just in case.'"