Our daily roundup of retirement news your clients may be thinking about.
Social Security Q&A: Your Social Security benefits depend on the specifics
Clients have to realize that there is no general rule to get the most of their Social Security benefits, which depends on their overall earnings and those of their current, ex or deceased spouses, as well as when they incurred these earnings, according to Forbes. This article features a widow who decides to take her retirement benefit first, with plans of switching to her survivor benefit when she hits full retirement age. The article then explains why such a strategy does not allow her to maximize her Social Security benefits based on her and her husband's earnings and the time they started earning. --Forbes
Miscalculating the retirement income you'll need
The Social Security Administration wants to increase the benefits for retirees, who need about 70% of their pre-retirement income to live comfortably through their golden years. However, the agency differs with financial advisors in measuring the replacement rate, as its formula uses the workers' wage-indexed average of lifetime earnings and not their final earnings, according to experts. The problem is that wage indexing of past earnings accounts for salaries that workers did not earn, making retirement income insufficient if it cannot match the nonexistent earnings, some experts maintain. --Wall Street Journal
Unlike Social Security, delaying Medicare benefits will cost you
Although delaying Social Security benefits will increase the value of monthly payments, clients are expected to pay penalties if they defer their Medicare benefits when they reach 65, according to Motley Fool. For example, clients who have Medicare Part A will pay penalties amounting to 10% more for twice the number of years that they delay the benefits, while those holding Part B will pay 10% more for every year they defer the coverage. Clients with prescription drug coverage under Medicare Part D may pay 1% times the base premium for each month they forgo the coverage. --Motley Fool
Don't set and forget your withdrawal rate
Retirees may start with a withdrawal rate of 4% when tapping their nest egg and adjust the amount based on inflation, according to an article from Morningstar. This article discusses the advantages and disadvantages of sticking to a fixed withdrawal rate regardless of the amount remaining in the nest egg, as one of the things that clients need to have on their pre-retirement checklist. When to pay off a mortgage and power-of-attorney are other issues that clients sometimes miss when planning for their golden years, as well as the concept and importance of practice retirement. --Morningstar
5 reasons not to retire abroad
Retirees are advised to skip their plans of spending their golden years in other countries, as these places could put their personal safety at risk given their turbulent past, political instability, and unfriendly attitude toward foreign nationals, according to MarketWatch. Retirees may also experience problems when they need medical services in these countries, as the language barrier could be a hurdle when conducting transactions in the local dialect. Homesickness and unforeseen expenses can also pose a serious concern for clients who decide to retire abroad. --MarketWatch
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