Our daily roundup of retirement news your clients may be thinking about.

Do stop-loss orders actually stop losses?

A stop-loss order is not a reliable tool to determine the maximum loss for selling a stock or an exchange-traded fund, since it does not dictate the security's price at the time of trading, according to this article on MarketWatch. For instance, if a client has a stop loss on a certain stock at, say, $45 and it opens low one day, say at $40, the sell order is triggered and the stock will be sold at the prevailing market price, not $45. To help offset this, clients can still use the stop-loss along with a "limit" on the stop-loss which dictates that they will sell for no less than the limit price. The limit, however, also does not guarantee a sale. The article concludes that stop-loss orders can be useful, but they aren't as much of a sure thing as they are often thought to be.  – MarketWatch

How smart retirement investors profited from the August market plunge

Many investors took advantage of the market volatility in August by converting a portion of their IRA to a Roth account, according to this article on Time Money. Such conversions increased 69% in August versus year-ago levels based on a quarterly report from Fidelity Investments. As IRA investors pay tax on the converted amount, their tax burden is reduced as the stock prices decline, enabling them to save on taxes. -- Time Money

Yes, Social Security is unfair, especially to women. But can it be fixed?

While the recent changes to Social Security rules address the inequities in the program that favor wealthy couples, there are also other partial ways in the system that are biased against women, according to C. Eugene Steuerle of the Urban Institute. The problem is that changes to fix inequities in the program seem to be selective and are made to meet political needs, rather than to enhance the program itself, says Steuerle, adding that "tightening the screws on one leak among many" benefits nobody. "As for the single parents raising children — perhaps the most sympathetic group in this whole affair — they got no free spousal and survivor benefits before, and they get none after." -- Los Angeles Times

Ignore the retirement alarmists: The 4% rule is imminently safe

Contrary to what some experts think, retirees who use the 4% withdrawal rule in tapping their savings are very unlikely to outlive their nest egg, says Michael Kitces, an expert in retirement planning. The 4% rule was conceptualized purposely for worst-case scenarios, but most retirees are not in such a situation, writes Kitces in his blog, adding that those using the rule have a 96% chance of ending up with more principal 30 years after retirement. Also, median retirees who stick to the 4% rule can expect their principal to be 2.8 times more after 30 years, as the average safe withdrawal rate over 30 years is about 6.5%, with the maximum rate going up to 10%, Kitces says. -- The Motley Fool

Baby steps to building a retirement

The new retirement account MyRA, created by the federal government for Americans who have no access to retirement plans in the workplace, is a good starter for saving for the golden years, according to this article on Washington Post. Workers who will invest in MyRA will pay no fees and face no investment risk, without any financial implication for the employers. As a starter plan, people can contribute any amount to the plan, although the contributions are capped annually at $5,500 for average age workers or $6,500 for those who are 50 and older. -- Washington Post

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