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

Auto-retirement investing: Will it be enough?
Adding an automatic enrollment, allocation and escalation features to retirement savings plans may not be enough as more data will be needed to prove that these strategies help workers boost their nest eggs, writes Charles Rotblut, vice president with the American Association of Individual Investors. While these options are better than plans that have no mechanisms in place to prompt workers to save, "there is some evidence suggesting employees in plans with an auto-enrollment feature are not saving enough," Rotblut writes. The existing data on the effectiveness of target date funds are also not enough to show "how they will perform in turbulent bond market conditions," Rotblut adds.  --The Wall Street Journal

Your 3 biggest Social Security questions answered
Social Security will be able to pay off 77% of scheduled benefits of retirees despite the projection that its trust fund will shrink by 2033, according to this article on CNNMoney. While many workers opt to collect their retirement benefits when they reach 62, delaying the benefits until age 70 can boost the benefit's value by up to 8%. Those who decide to get the benefit before reaching full retirement age may receive reduced benefit if they continue working but there will be no more deduction once they reach FRA.  --CNNMoney

Retirement income funds can make withdrawals simple
Retirees who are concerned that their nest egg will not be enough may consider investing in retirement income funds, according to this article on USA Today. These funds may come as a mix of stocks, bonds and other securities in one portfolio to generate earnings, or as investments that allow principal and promises to last through managed withdrawals. These funds are suitable for retirees who rely on withdrawals because these investments are relatively stable.  --USA Today

Roth IRA withdrawal rules to buy a first home
An investor who considers buying his first home can take withdraw principal contributions from his Roth IRA without any penalty unlike when he takes withdrawal from traditional IRA, according to this article from Bankrate. However, he will face taxes and penalty if he takes nonprincipal Roth withdrawals because of the five-year rule. To avoid any penalty, the investor needs to prove that the nonprincipal withdrawal is a qualified distribution.  --Yahoo Finance

How your Social Security benefit is calculated
The initial Social Security benefit at full retirement age is computed based on a complicated formula that includes a number of factors, such as the worker's earning record and wage inflation, according to this article on Morningstar. The formula --known as the Primary Insurance Amount-- offers a bigger benefit relative to career earnings for a low-earning worker than one with higher income, says Stephen C. Goss, chief actuary of the Social Security Administration. "If you and your employer have been paying taxes, you have to work enough time to become insured--either for retirement benefits when you are 62 or older, or if you become disabled at an earlier age, or should you die [leaving a benefit for your survivors]."  --Morningstar

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