Our daily roundup of retirement news your clients may be thinking about.
Holding an IRA is recommended if clients are likely to change jobs, their spouse is unemployed, and they want to get non-taxable income when they retire, according to this article on Forbes. There are limits to the contributions to an IRA and clients will not get tax deductions for their contributions especially if they maxed out their workplace plans. Clients may also look at having a Roth IRA if contributions to a traditional IRA will not qualify them for a current year deduction. Forbes
The rising use of a robo-adviser may pose a risk for retirement investors because the simplistic tool cannot account for other factors that affect returns, which will be more difficult to achieve in the coming years, according to this article on MarketWatch. Another alarming trend is the paperless transactions, which will make it harder for retirement investors to do the task of assessing the overall performance of their portfolios, which is important especially when they are already retired. -- MarketWatch
Total-return investing and income investing are familiar strategies that investors can use to ensure they will have a steady income stream in retirement, according to this article in The Wall Street Journal. The total-return strategy is recommended because it is simple to implement, reliable, and tax-efficient, says Barry Kaplan, chief investment officer of Atlanta-based Cambridge Wealth Counsel. Investing that focuses on income and dividends is a safer strategy because income returns are stable and more predictable and dividend payments rise even amidst dwindling stock prices and are steady despite market volatility, writes Farrell, CEO of Northstar Investment Advisors. The Wall Street Journal
The basis for the new rules aimed at addressing the conflicts of interest and hidden fees charged by brokers for providing retirement investment advice is not supported academic literature, according to a report commissioned by the Securities Industry and Financial Markets Association. Federal officials also failed to determine the amount of possible benefits for investors under the existing regulations, the report says. "It is a basic tenet of economics that to conduct a cost-benefit analysis of an alternative public policy one needs to have a well-articulated proposal. The Report does not put forward such a proposal," according to economists at National Economic Research Associates who made the study. The New York Times
Investors are advised to build a portfolio that will support them through the age of 100, as people are expected to live longer, according to this article in U.S. News & World Report. They need to avoid the path of traditional retirement that their parents followed and put the key components of their portfolio to a test. Clients may also consider having two bucket lists, defer buying annuities until they reach 70 and balance withdrawals and portfolio growth to keep the principal intact. DailyFinance
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