Our daily roundup of retirement news your clients may be thinking about.
Companies that provide advice on Social Security are rushing to update their computer systems that allow them to identify the best claiming strategies for their clients after a new law scraps "file-and-suspend" and restricted application as strategies for couples to claim their retirement benefits, according to this article in The Wall Street Journal. The firms complained that the changes to Social Security rules were done unusually fast. “Given the secretive nature of the budget negotiations, very few people knew that this was going to be included in the budget bill. This is not normally the way changes in Social Security are done,” says Christopher Jones, chief investment officer of Financial Engines. –The Wall Street Journal
One of the first things that people will need to do once they retire is to create a guaranteed income stream as a replacement for their wage income if their pension or Social Security benefits won't be enough to cover their needs, according to this article on Money. They also need to update their resume as they may want to work and to consider delaying Social Security benefits until the age of 70 to boost the benefit's value. Staying socially active can help them have a happy life in retirement while engaging in estate planning is recommended if they want to leave something behind for their loved ones when they die. –Money
Clients who intend to start collecting their Social Security retirement benefits before reaching their full retirement age can expect their benefits to be reduced by up to 25%, according to this article on Kiplinger. The reduction will be bigger if they continue to work and their wage income exceeds a certain threshold. The amount to be deducted from the benefit will be roughly 50% of the amount that exceeds the income limit, which stands at $15,720 for 2015 and 2016. For example, if clients earn $5,080 more than the limit, $2,540 will be deducted from their retirement benefit. –Kiplinger
Americans should reconsider retiring at traditional retirement age as people tend to live longer than estimated, says AARP chief executive Jo Ann Jenkins. "The whole idea of retirement is totally changing. People may be retiring from one job, but that doesn’t mean they want to stay at home or travel," says Jenkins. Also, "[s]ince many people are living long past traditional retirement age, they are going to need additional financial income. So often, whether pushed by pain or pulled by possibilities, people are looking for work." –Washington Post
The new retirement program rolled out by the U.S. Treasury, called myRA, is a good option for people who haven't saved yet for retirement or have no access to a workplace retirement plan, according to this article on CBS Moneywatch. Although the myRA offers limited investment and doesn't allow people to save enough to secure a comfortable retirement, the plan is designed primarily to encourage people with no retirement savings to start building a nest egg for their golden years. With modest savings in the myRA, these workers can shift to IRA and retirement plans sponsored by their future employers. –CBS Moneywatch