Our daily roundup of retirement news your clients may be thinking about.
Retirees who receive a pension are more unlikely to get adequate information if they are given an option to get a lump-sum payment before or after they retire, according to a study by the Government Accountability Office. More pension plans have offered such an option since 2012, with retirees given a specific period whether to accept lump-sum payments. While giving a time frame to decide is not outlawed, "questions have been raised about participants' understanding of the financial tradeoffs associated with their choice," the report says. The Wall Street Journal
Retirement investors who consider holding a qualified longevity annuity contract need to determine whether they prefer a single-life or joint-life payout before making a decision, according to this article on MarketWatch. They also need to know if they want to include a return-of-premium guarantee, and if getting a cost of living adjustment rider is a smart move. It is also important for them to know their total IRA assets and possible RMD tax savings, and they need to determine the suitable age to start collecting an income, as well as identify reputable carriers that offer the best terms. MarketWatch
Investors polled by Legg Mason claimed that the savings they need to continue their current lifestyle into retirement would be $2.5 million on average, according to this article on CNBC. Most people, however, won't need the same amount to enjoy retirement. To estimate the amount of savings they need based on their circumstances, clients are advised to develop a financial plan that accounts for the costs of long-term care, an expert says. CNBC
The Illinois Supreme Court is expected to tackle a lawsuit that challenges the measure by the state Congress to reduce the pension for retired state employees as well as the promised benefits for current employees, according to an article from The Associated Press. The state lawyers are likely to defend the changes by saying that the state faces a $111 billion deficit. A county judge had issued a verdict on the case that ruled the reform to be against the state Constitution. The New York Times
Clients need to realize that their Social Security benefits will not cover all their living costs in retirement, according to this article in U.S. News & World Report. It is also not true that a low inflation is not a cause of concern and that investment income will get a boost from the stock market. While seniors want to work full-time or part-time after they retire, finding a job after retirement can be difficult. Clients should not expect an inheritance from their parents as people tend to live longer and may use up their nest eggs. Yahoo Finance