Our daily roundup of retirement news your clients may be thinking about.
Six ways retirees fool themselves
Investor confidence is currently high compared to previous periods, especially now that the bulk of baby boomers are retiring, according to MarketWatch. However, some retirement investors still follow mistaken and oversimplified assumptions in their investing approach. Some of these are the belief that investing can be done with little research; low-cost investments are usually successful; stock market drops are brief; and that alternative investments, such as gold, serve as excellent countermeasures. Investors need to properly understand how such assumptions are mostly untrue in order to avoid investment pitfalls. --MarketWatch
How You Can Get Peace of Mind Income in Retirement
The "bucket strategy" for retirement investing is becoming more popular with retirees, but this option also carries unexpected risks, according to CNN Money. Buckets provide a psychological peace of mind for retirees, but in reality, gains in any bucket strategy could be achieved by any regular portfolio, making it no more or no less effective than other investment options. One trap in this strategy is the failure to rebalance the portfolio annually or regularly, especially if the markets are becoming unpredictable. --CNN Money
Changing Insurance Plans Can Reduce Client's Premiums
There are several options for a client to lower life insurance premiums, especially when nearing retirement, according to The Wall Street Journal. One financial planner, for example, found a $12,000 annual premium plan for a pre-retiree to replace an $18,000 a year plan for similar coverage through an insurance swap that is allowed by the IRS. This option, which is similar to a 1035 insurance exchange, allows clients to switch insurance contracts seamlessly without lapsing and without being taxed. --Wall Street Journal
Should You Pay Off Your Mortgage?
Deciding to pay off home mortgages depends on factors such as other existing debt, interest rates, earnings and savings, according to Forbes. "Unsecured" debt such as auto loans and credit card debt are better paid off first because a home mortgage is actually considered to be "good debt" as its appreciating value establishes good credit. Home mortgage interests can also be deducted against annual tax returns, and clients should check if they qualify for such mortgage interest deductions. --Forbes
The risks of spending your retirement savings
Withdrawing from retirement savings could be needed at some point even for prudent clients, however, there are risks that investors should avoid, according to U.S. News and World Report. Clients should watch against big declines that can deplete nest eggs and should shift their money into more conservative investing options. It would also help if clients pay off as much debt as they can before retiring as this will lower the expenses they have to pay off in retirement. Lastly, clients should explore favorable tax strategies, especially in deciding when to take their Social Security. --Yahoo Finance
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