Our daily roundup of retirement news your clients may be thinking about.
People in higher income brackets can consider replacing less of their pre-retirement income than the 80% usually suggested by financial planners, according to research cited in this MarketWatch article. "The 80% rule is wrong because it's too simplistic. Most of us don't want to replace our gross income. We want to replace our paycheck," said Professor Michael Finke. "A household that is saving 20% of their pay, for example, in a 401(k) needs to replace a lower percentage of their final pay than one saving only 5% because they are used to living off less," said David Blanchett, head of retirement research at Morningstar Investment Management. –MarketWatch
Amid dwindling interest returns, retirees who rely on income from their investments are advised to avoid cash deposits, fixed annuities and other investments that lock their money up for a long period, according to this article on Forbes. They are also advised to minimize their expenses and start earning again by working part-time. Retirees may need to lower their expected returns from their investments and consider having a financial plan. –Forbes
Clients looking to retire but are feeling the pinch after cosigning their children's student loans can look at improving their cash flow. Some cash flow improvement considerations include refinancing mortgages to lower rates, scouting for better insurance coverage and reducing monthly expenses such as cable bills. Clients can also consider refinancing student debt but there aren't many options. –CNN Money
Contrary to what people think, baby boomers face better retirement prospects compared with millennials, according to a survey by brokerage firm Charles Schwab. Millennials may not be able to secure their retirement because they are unlikely to give up vacations and other things that spruce up their lifestyle and are having a hard time saving because of their hefty student loan debt. Also, deciding where to invest can be difficult for many young workers and while most of them are keen on receiving professional advice, not many of them actually take assistance from financial advisors. –The Motley Fool