Our daily roundup of retirement news your clients may be thinking about.
The Obama administration is expected to endorse more stringent fiduciary rules that will require brokers to have their clients' best interest in mind when recommending retirement-account investments, according to this article in The Wall Street Journal. Under existing rules, brokers recommend suitable products that provide big benefits to them but may not be the best option for investors, according to government officials. The current regulatory environment creates perverse incentives that ultimately cost savers billions of dollars a year, wrote Jason Furman and Betsey Stevenson of the White House Council of Economic Advisers in an internal memo. The Wall Street Journal
IRA investors are advised to avoid procrastinating when making contributions to their accounts, according to this article on Time Money. In a span of 30 years, clients who wait until the deadline to contribute to their IRAs end up with assets that are $15,500 less than those who make the contributions when the tax year begins, according to Vanguard. Procrastinators will have lower outcome because of lost compounding of their contributions. Time Money
While Social Security faces long-term financial woes, most people pay attention to the retirement portion, which has a trust fund that can guarantee payments until 2033, according to this article on DailyFinance. Social Security has a more pressing problem: its trust fund for disability benefits could deplete by the end of 2016. Congress has less than two years to address the looming crisis, and the country will have an idea of what will happen if Social Security retirement trust fund runs out of money in 2033 if lawmakers fail to fix the disability trust problem. DailyFinance
Clients may save for retirement while paying down their debts, but getting the right balance between the two depends on their financial goals, according to this article on Forbes. They need to have the best possible plan and to automate the payments and contributions so they can accomplish the two simultaneously. Those who consider debt payments and retirement saving at the same time are advised to take a number of actions, such as determining their net worth and the debt, to know if such a strategy is a feasible option for them. Forbes
Clients who buy an annuity product to guarantee a lifetime payment are basically betting with the insurer that their life span will be longer than its projection, according to this article on MarketWatch. An annuity is a true transfer of risk as annuity companies will have no return on investment until the clients die, so they adjust the payments to account for longer life expectancy. An annuity product is a good option for clients who expect to live longer, but they are advised to get it from a carrier with a solid track record. MarketWatch