Our daily roundup of retirement news your clients may be thinking about.
Rate hike is milestone for retirees
The Fed's decision to raise interest rates by 0.25% will be a welcome relief for retirees who live on income from bonds, certificates of deposit and money market funds. The rate hike is the first after nearly a decade of zero interest rates and higher-than-average inflation. Retirees have been earning zero on their cash, so seeing a short-term rate change is certainly good news for them, notes an advisor in the article. --Time Money
The checklist to manage multiple retirement accounts
Clients should avoid assuming that their former employers will manage the 401(k) assets they left after they resigned, and that these assets would appreciate over the years. These assumptions can be wrong and hurt their retirement savings. To protect their old 401(k) assets, clients are advised to monitor their former plans and act accordingly if there will be any changes, such as merger and acquisition decisions, which could cause them to lose money from changes in fees, investment selections and asset allocations. --MarketWatch
Getting a portfolio de-cluttered and retirement-ready
A 64-year-old retirement saver who plans to retire in three years wanted to streamline his investment portfolio and that of his 53-year-old wife, who intends to retire after 10 years, so that their investments would be ready by the time they retire. The client preferred the bucket approach and wanted to determine how viable his total retirement plan is. A Morningstar analyst recommended allocating a greater share of the taxable account to bonds in order to facilitate withdrawals from the account when it's advantageous from a tax standpoint. Because the client's Roth will probably be last in line for withdrawals, that account is more stock-heavy in the "after" portfolio. The wife's accounts, meanwhile, can stay more aggressive because she's lucky enough to have a pension that will fully replace her ending salary. Plus, her time horizon is longer than the husband's. --Morningstar
How to tell whether clients can retire early
Clients will know if they can retire early if the annual income they expect to get from their existing retirement accounts will be enough to support a lifestyle they intend to have in the golden years. For example, a client with $500,000 in retirement assets can expect an inflation-adjusted annual income of about $20,000 for 30 years if he or she adopts the 4% withdrawal rate. He may start with a smaller withdrawal rate of 3% and get an annual income of $15,000 and increase the rate gradually over the years if he wants to make sure he won't outlive his nest egg. --CNNMoney
Saving tips for late starters
Clients who start out late in building their nest egg are advised to grab the first opportunity to save for retirement. They also need to max out their retirement plan contributions, consider moving to a smaller home, and work longer to continue earning an income. Other ways for clients to catch up on retirement savings are creating more cash flow and avoid having more debt, taking more investment risks and holding too much cash. --Yahoo Finance
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