Our daily roundup of retirement news your clients may be thinking about.
Because of advances in medicine and higher life expectancy, clients can lengthen their long-term care insurance policy's elimination period to up to three years, subsequently making the coverage more affordable, according to Michael Kitces, director of research at Pinnacle Advisory Group. An article on MarketWatch, which cited an earlier article in Financial Planning, a sister brand to Bank Investment Consultant, says that choosing a longer elimination period could reduce the actual probability of making a material claim against the policy. [I]t means the cost of coverage could fall significantly, while policies could simultaneously have richer benefits (after the elimination period) and do a better job of insuring against extreme events when they occur. MarketWatch
Clients are advised to strike a balance between their tax-deferred and non-tax-deferred retirement contributions to avoid paying bigger taxes in retirement, according to an expert. A Roth IRA is a strategy that will help them lower their tax burden after they retire, giving them more choices that will enable them to plan for taxes when they are required to withdraw from their retirement accounts. A Roth conversion is also recommended during a tax year when their income is lower than usual. Yahoo Finance
Many workers decided to cash out their 401(k) assets when transferring to another employer, a mistake that hurt their financial security in retirement, says Selena Maranjian, an expert with The Motley Fool. Another common mistake that 401(k) participants make is investing in more expensive funds when they can choose funds with lower fees that could boost their returns, says Jordan Wathen. Many companies match their employees' 401(k) contributions, but many of these workers choose not to take advantage of it, according to Dan Caplinger. The Motley Fool
The new law in Illinois that requires Roth IRA automatic enrollment for workers who have no access to retirement plans is an initiative that other states can adopt to improve the retirement prospects of many Americans, according to this article on Morningstar. The U.S. needs to create more workplace savings programs, as employer-sponsored retirement plans are not accessible to 50% of workforce in the private sector, especially to those in the lower-income group. It is hoped that Illinois can smoothly implement the initiative to bolster advocacy groups efforts to pass similar programs in other states. Morningstar
A 69-years-old cannot claim both her own retirement benefit and a survivor's benefit on her husband's record after she turns 70, according to this article on Forbes. After reaching that age, she may continue receiving her survivor's benefit, if it will be bigger than her own retirement benefit. She may shift to her own retirement benefit, only if it will be more than the survivor's benefit. Forbes
- Social Security: With the SSA Overwhelmed, Advisors Can Provide Much-Needed Help
- SEC Examiners to Focus on Retirement Planning Issues
- Kitces: Best Strategy for Portfolio Withdrawals?