Our daily roundup of retirement news your clients may be thinking about.
How to save public pensions, no federal bailout needed
Congress can help many public pensions address enormous debt by creating a law that will enable states and local governments to lower the benefits they promise their employees, writes an expert. Lawmakers should ensure that only pension plans in a serious debt situation will qualify for aid, and that the relief application should be at the discretion of state and local government officials, the expert adds. "Most important, pensions should be required to uphold their original intent: to keep retirees who can no longer support themselves out of poverty." –The Wall Street Journal
Retirement puzzle: Find out what your 401K costs, and how to make it work for you
401(k) participants are advised to check the fees in their plan and find ways to reduce the cost to enhance their returns, according to this article on CNBC. To do this, they should read their plan benefit book and pick funds with expense ratios that are lower than 1 percent. "For most investors a really nice index fund is all you need and it also has a lot lower fees" says an expert. –CNBC
Did I just get a raw deal from my deferred-compensation plan?
If a company is sold, workers who participated in its deferred-compensation plan are likely to receive lump-sum payments, and this could result in a higher tax bill, according to this article on MarketWatch. Those who relocate will have the lump sum payment taxed in the state where they live at the time they receive the taxable compensation. –MarketWatch
Thinking of buying your dream home for retirement? Do your homework first.
Clients who consider buying a new home after they retire are advised to rent a house in the area before pushing the plan, according to this article on Washington Post. They should also make sure that they can afford the house in the event that their spouse gets seriously ill or dies, that they can remain in the property when they reach their 80s and 90s, and that the property is accessible to amenities and facilities. Before buying a new house, they should determine whether the property will be their primary or secondary home, and they should consider their cash flow and home maintenance costs. –Washington Post
3 reasons it's smart to take Social Security benefits at 62
Claiming Social Security retirement benefits at age 62 makes sense if clients are cash-strapped and need a new source of income to cover their needs, according to this article on Motley Fool. An early retirement is a preferable option for farmers, mechanics and other blue collar workers who want a break from their strenuous jobs. Those with a serious health issue or a terminal illness may also want to file for Social Security early to enjoy their benefits. –Motley Fool