Our daily roundup of retirement news your clients may be thinking about.
Can lower earner in couple get Medicare coverage on spouse’s record?
Some workers can expect their low-earning spouses to get Medicare coverage on their working records if certain requirements are met, according to this article in Money. Spouses are entitled to Part A hospital coverage if the worker earns at least 40 credits during their working lives (the equivalent of about 10 years of work) or pay as much as $411 monthly in premiums. Workers will need to pay $105 in monthly premiums to have their spouses covered under Part B. Workers should reach the age of 62 while their spouses must be at least 65 years old, and the couples must have been married for over a year to qualify for the premium-free Part A. -- Money
Spend down or gift retirement accounts? Here’s some math
Many retirees who have tax-deferred and tax-exempt retirement accounts face the dilemma of which one to spend and which one to leave to their heirs, according to The Wall Street Journal. A careful computation is crucial for retirees to tap their retirement funds and maximize the after-tax bequest they can leave to their heirs when they die. For instance, a retiree who has $100 each in a tax-deferred account and a tax-exempt account may be better off withdrawing $65 from the tax-exempt account to cover her yearly needs amounting to $65 instead of withdrawing $100 from her tax-deferred account. By tapping tax-exempt account, the retiree will leave a total of $120 after taxes for her son, instead of $100 if she opts to withdraw the full amount from her tax-deferred account.) -- The Wall Street Journal
Why retirees can't put required minimum distributions into Roth accounts
Just like in an IRA, retirees may need to take the required minimum distributions from a 401(k) plan before they can convert the money to a Roth account, according to this article on MarketWatch. However, they should check the 401(k) plan first since some plans allow their participants to avoid RMDs and convert some funds into a Roth. Retirees don't need to open a separate checking account for their RMD income since the IRS wants retirees to withdraw enough money for their RMD. They also are free to convert as much retirement money as they want from the plan once they have taken the RMD. -- MarketWatch
Social Security and savings bonds: Q&A
A senior who has reached his full retirement age without filing for Social Security retirement benefit can expect his wife to receive survivor benefit equivalent to the his retirement benefits if he dies before the age 70, according to an expert. This is the case if the wife's own retirement benefit is lower than the survivor benefit and she has reached her full retirement age, says the expert. “In a scenario in which a surviving spouse files for widow/widower benefits prior to full retirement age, those benefits are reduced for early filing.” -- USA Today
Are your clients on track for retirement? Do the math
Clients who are getting close their golden years may start with the 4% withdrawal rule to determine whether they are on track in securing their retirement, according to this article in the Los Angeles Times. Another option, especially for younger people, is the retirement account multiple, which entails calculating the level of savings as a multiple of their final pay. For instance, that multiple would be 5 if the client has $500,000 in their retirement accounts while their salary is $100,000. Those who want to retire at 65 should have at least a multiple of 7 to have a comfortable retirement, says a researcher. -- Los Angeles Times