Our daily roundup of retirement news your clients may be thinking about.
Clients need to be aware of the agents' sales pitch for annuity products as it can be misleading, according to this article on MarketWatch. Agents tout that these products offer 8% guaranteed returns, but this 8% is not a yield but an income rider. As a benefit that can be attached to a deferred annuity, the 8% means an annual fee for the life of the annuity policy. Annuity buyers can only use it for income or else it loses its value, but the high rider percentage credit ceases permanently once they tap the rider. MarketWatch
The Supreme Court's decision to overrule a lower-court ruling on a lawsuit involving 401(k) plan investments has clarified an obscure provision of ERISA concerning the application of the statute of limitations to a breach of fiduciary duty, according to this article on Time Money. The high court's decision means that employers will have to offer investments with lower fees within their 401(k) plans or face the risk of being sued by participants over costly investments. Time Money
Clients need to realize that Medicare and Medicaid are not the same, and they should know the main differences between these two programs, according to this article on The Motley Fool. Medicare is health coverage for workers aged 65 and above and younger workers who have certain disabilities and end-stage renal disease, while Medicaid is intended for people with limited income and financial means who cannot pay medical costs. Medicaid also has a broader coverage compared with Medicare, which covers medical services that are offered only in a specific program. The Motley Fool
Unlike in other countries where cashing out of defined-contribution plans is capped, the U.S. has rules that allow workers to withdraw their money from their defined-contribution retirement accounts before they retire, according to a working paper by economists from the National Bureau of Economic Research and two universities. Although these rules enable people to manage their savings, early withdrawals from these plans can undermine retirement security of American workers, the paper argues. The Wall Street Journal
Planning is an essential factor for people who want to go on semi-retirement before finally leaving the workplace for good, according to this article in U.S. News & World Report. Semi-retirement is a good option for those who find jobs that they enjoy and want to spend on things they have been wanting to do. Those who want to semi-retire anticipate the unexpected since anything can happen given the risks that are associated with age. Yahoo Finance