Our daily roundup of retirement news your clients may be thinking about.
Why don't more people wait to claim Social Security at 70?
Although Social Security retirement benefits increase at the age of 70, many seniors opt to claim their benefits before they reach that age, according to personal finance website Motley Fool. The latest data shows that 90% of Americans start collecting benefits at age 66 or earlier, In fact, less than 5% wait until age 70 (2% of men and 4% of women). Since a retiree's benefit for those who wait until age 70 is a whopping 76% greater than those who file at age 62 (before adjusting for eight years of COLA increases), the looming question is: Why don't more people wait? The obvious answer is that many Americans stop working before 70 and need the money. This isn't necessarily by choice. In a study from EBRI, 61% of workers who stop working at age 65 or earlier, did so for health reasons. Another 18% were laid off, and yet another 18% retired to care for a family member. -- The Motley Fool
A restricted application Social Security tip for 132% higher benefit
A senior who still qualifies for Social Security restricted application may have his 64-year-old wife file for her own retirement benefits when she reaches the age of 66, says an expert. He will need to restrict his application to spousal benefits by the time he turns 66, the expert adds. “And when you turn 70, you’ll want to switch to your own benefit, which will be 132% larger than it would have been at 66.” -- USA Today
How a single person can minimize taxes in retirement
Senior clients need to plan how to tap their retirement accounts to minimize the tax bite after they retire, according to this article on Yahoo Finance. They need to know that a portion of their Social Security retirement benefits may be taxed while their withdrawals from IRA and 401(k) are included in their taxable income. Roth IRA withdrawals are not subject to income tax while tax breaks should be considered before opting to itemize tax deductions. -- Yahoo Finance
Why bonds still make sense in retirement
Investors are advised to reduce their stock allocation and boost their allocation to bonds in retirement, according to Kiplinger. After they retire, investors' goals shift from growth to capital preservation and consistency in performance. That's why they need to lower their risk exposure by opting for more bonds, accordimg to this article, which are less risky compared with stocks. -- Kiplinger
Which Social Security calculator to use
Social Security provides online and dowloadable calculators that clients can use to get a good estimate of their futire retirement, disability and survivor benefits, according to MarketWatch. These calculators will requires different sets of data and yield estimates of the benefits they want to know for effective retirement planning. Remember that these estimates are in current dollars, so they don’t account for future inflation and they assume you’ll continue to work at last year’s income level (or the last year posted) until the ages shown. -- MarketWatch