Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
The 4% initial withdrawal rate rule from a 60/40 portfolio will not necessarily be best for all clients, according to MarketWatch. Historically, some retirees end up with a huge amount of money because their withdrawal rate was too modest, although in certain periods, the application of the rule wasn't the correct choice. Based on data, the 4% rule would give retirees less than their starting principal amount if real returns in the portfolio didn't do well during the first 10 years of retirement. -- MarketWatch
Bonds should be part of a retirement portfolio because they offer fixed-income gains and diversification, according to CNBC. Experts discuss using individual bonds as a bridge for retirees who have not yet started taking money from their accounts, the market response for a corporate bond and increasing and diversifying through bonds as clients become older. -- CNBC
Diversification, not concentration, is the most effective way to protect one's retirement savings for a crisis, according to Time. A diversified portfolio will prevent clients from panicking because it will allow clients to have assets that are falling; but others that are either doing well or holding up. Taxes and inflation are two risks that clients may ignore, even though they are more likely to impact a portfolio. -- Time
The right time to claim for Social Security retirement benefits will depend on several factors such as one's current need for funds and longevity. The other factors to consider are the rate of increase of benefits as one defers claiming, if the client will work while receiving benefits, marital status and taxation. -- Forbes
Knowing intestate succession rules in one's specific state will help clients write their last will properly, according to Motley Fool. Other points to remember are that some properties might not be covered under a will, such as those who have beneficiaries named. Clients can also use a revocable trust or living trust so assets don't need to be made public -- or heirs can get their inheritance without going to court -- and wills created without professional help mostly assume common situations, so it is best to hire a professional regarding special situations; such as having disabled adult children or non-U.S. citizens family members and others. Motley Fool