Our daily roundup of retirement news your clients may be thinking about.
How to think about risk in retirement
While retirees are often advised to use the age-in-bonds formula to ensure that their savings will outlast them, a study concludes that it is less risky to increase the equity allocation throughout the golden years than reducing it, according to this article in The Wall Street Journal. As such, buying an inflation-adjusted annuity with payouts enough to cover projected spending or collecting Treasury inflation-protected securities with varied maturities are recommended but not perfect to ensure retirees won't outlive their nest eggs. Holding standard Treasury securities and high-quality municipal and corporate bonds of short maturity instead of an annuity or TIPS is a wiser move than the first two strategies. The Wall Street Journal
Information overload can hurt your retirement
Financial advisors warn while there is a lot of available information about retirement, it will unlikely benefit people who are planning for their golden years, according to an article on Motley Fool. Studies have found that clients' retirement decisions and understanding of financial products haven't improved despite access to all this information. Clients need to avoid the information overload and instead "focus on things they can control," says Russ Thornton, a financial advisor with Atlanta-based Wealthcare Capital Management. --Motley Fool
Social Security Q&A: After collecting early, can I file on my higher-earning ex's record when she files?
A retiree who has been getting his own retirement benefit can claim a spousal benefit on his former spouse's record if she is more than 62, according to an article on Forbes. Although the ex-wife's retirement benefit will be bigger than his own, he will only get an excess spousal benefit, which may be lower than his current benefit. If he is below 70, the client may suspend his retirement benefit until he reaches full retirement age, and take the excess spousal benefit if 50% of his ex-spouse's benefit is bigger than his full benefit. --Forbes
How unplanned events rock retirement probability models
Using statistical models to determine success probability is not a reliable approach to retirement investing as these models cannot account for new policies and other unforeseen events, according to an article on MarketWatch. Retirement investors may consider investing in more stocks but need to stick to a conservative plan. An effective strategy to a successful financial planning is to spend a portion of their nest egg in the early years of retirement and delay their Social Security benefit to increase its monthly value. --MarketWatch
Are you heading toward a retirement crisis?
While the existence of a retirement crisis depends on the assumptions that people make, it for the best interest for people to act and plan for their golden years instead of getting anxious about their future, according to this article on CBS Moneywatch. Clients need to make better decisions concerning a number of things, such as Social Security benefits, amount of retirement income, and place to retire, to secure their retirement. --CBS Moneywatch
- Individual Retirement Plan Ownership Trending Down as Assets Climb
- IRS Clarifies Key Rollover Question
- IRS Urged to Crack Down on Multimillion-Dollar IRAs