Our daily roundup of retirement news your clients may be thinking about.
November is the best time to work on retirement finances that need to be taken care of before the year ends as people get busy during the holiday season, according to this article in U.S. News & World Report. Clients may check how much they have contributed to their 401(k) plans and IRA, and may considering maxing out their contributions if they haven't reached the limit yet. They may also sell stocks that had losses and use capital loss to offset their capital gains and cut their taxes, after which they can assess their asset allocation in their portfolio and rebalance their investments when necessary. Yahoo Finance
Determining the "funded status" of a personal retirement plan enables clients to know if they will be able to generate income in the golden years, according to an article on MarketWatch. One method to ascertain a retirement plan's funded status is to divide the net present value of their assets by the net present value of their liabilities, experts say. Clients may also determine if their retirement is adequately funded by using the annuity payout, the gap, and the sustainable-withdrawal-rate methods, they add. MarketWatch
The transition to retirement means the end of receiving a regular paycheck and creating an income stream from assets and other investments, according to this article on CNBC. To accomplish this, soon-to-be retirees need to have an estimate of their overall expenses and determine their total earnings from their guaranteed and variable income. If expenses will exceed their income, they may take withdrawals from their investment portfolio. Also, pre-retirees need to weigh their Social Security options and set up a home base account to manage their cash flows efficiently. CNBC
Knowing the best time to starting collecting Social Security retirement benefits enables people to maximize the benefits they will receive to augment their savings, according to this article. For married couples, there are more than 8,000 ways to file for benefits, so picking the right claiming strategy can be challenging. "Deferring the start date of your Social Security benefits can significantly increase the amount of payments. It's the best deal for households seeking more annual income in retirement," says Wei-Yin Hu, director of financial research for Financial Engines. Daily Finance
A wife who has been collecting her retirement benefits for over a year but wants to file for spousal benefit on her husband's record is not allowed to pay back the benefits she received and reapply when she reaches full retirement age, according to this article on Forbes. This is because retirees can return the benefits if they have been collecting them for less than a year. Her option is to suspend her benefit when she reaches FRA and resume the collection when she turns 70. Forbes