Our daily roundup of retirement news your clients may be thinking about.
Which account is best for savings?
Public sector workers who have the option of using a 403(b) plan and Roth IRA as their retirement savings vehicles are advised to contribute to both accounts, say Gretchen Cliburn, a certified financial planner with BKD Wealth Advisors. Maxing out contributions to a 403(b) plan is a wise move if clients think that their tax rate in retirement will be lower than their current tax rate. They may consider contributing to a Roth IRA if they max out their 403(b) contributions, as Cliburn and other experts recommend retirement savers to create tax diversification in their portfolio to spread the risk. --Time Money
How 401(k)s and IRAs will (and won't) change in 2016
Clients saving for retirement need to know that contribution limits for 401(k) plans and IRAs will remain the same next year, according to this article in U.S. News & World Report. Income cutoffs for traditional IRAs will also remain unchanged, while income cutoffs for Roth IRA will increase to $117,000 and $132,000 for individuals and heads of household, and $184,000 to $194,000 for married couples. Income limits for IRAs will rise for spouses with no retirement accounts while income limit for the saver's credit next year will be $30,750, which is $250 higher than this year's limit. --Yahoo Finance
When Social Security benefits and Medicare premiums collide
As Medicare Part B premiums are expected to rise by 52% for many retirees with no increase in Social Security benefits next year, advocates for seniors remain hopeful that Congress will pass legislation to prevent the big increase, writes Morningstar columnist Mark Miller. While it is uncertain what the short-term fix would be, lawmakers are likely to keep the premiums from increasing for most enrollees, except for those paying high-income surcharges, Miller says. "Congress has a consistent track record of tapping wealthy seniors to foot part of the bill for Medicare reform--most recently in the "doc fix" legislation." --Morningstar
A positive attitude leads to a longer retirement
Multiple studies have shown that a positive attitude is key to having a happier and longer life in retirement, according to this article on MarketWatch. A study by a psychologist at University of North Carolina-Chapel Hill found that "experiencing positive emotions vs. negative emotions in a 3-to-1 ratio leads people to a tipping point beyond which they naturally become more resilient to adversity," according to a blog. This resiliency results in a longer life despite going through challenges, says the researcher, adding that "this may be the wisdom of old age: a focus on positivity can make late life fulfilling, despite the inevitable aches, pains, and memory loss." --MarketWatch
Advice for working retiree on Social Security, Medicare Part B
A client does not need to wait until he turns 70½ to start collecting Social Security retirement benefits since he will have earned his maximum in delayed retirement credits at age 70, according to this article on USA Today. Since the client would likely be subject to the income-related monthly adjustment amount for his Medicare Part B premium given his modified adjusted gross income, he won't be protected by the hold-harmless rule, so he would be better off waiting until next year to file for retirement benefits, an expert says. “This will allow him to earn his maximum in delayed retirement credits but more importantly maximize his spouse’s survivor benefit since there is a 20-year age gap and she may not have her own earnings record.” --USA Today
- Helping Less-Than-Frugal Clients Retire
- How Silent Trusts Can Help Your Clients
- Older Boomers Have Less Saved Than Gen Xers: Retirement Scan