Our daily roundup of retirement news your clients may be thinking about.
Opinion: Why raising Social Security’s ‘full retirement age’ is a bad idea
Increasing Social Security’s full retirement age from 65 to 67 will reduce the percentage of benefits that workers may claim earlier than the FRA, according to this opinion column in MarketWatch. Meanwhile, those who intend to increase their retirement age from 66 to 67 to claim full monthly benefits will receive benefits for one less year. Low-paid workers, who were more likely to retire early than high-wage earners, will be especially affected in the event of continuous FRA increases.
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Seed a Roth IRA for grandkids
Retirees can help their grandchildren prepare for future expenses or build a tax-free retirement income by contributing to their Roth IRA accounts, according to Kiplinger. However, such contributions shouldn’t be more than their grandchildren’s earnings and should be coordinated with other gifts to avoid paying for gift taxes. Retirees whose grandchildren lose their jobs or have lower-than-expected earnings should also withdraw excess contributions and their earnings from the account before the next tax-filing deadline.
4 things clients should know about moving after they retire
Retirees planning to move to a new home should decide on the best timing for taking the plunge to avoid having unnecessary expenses, according to this article on Time Money. For instance, buying real estate before retiring may strengthen connections and interest in the area but should be considered along with the costs of ownership that entails with it. Retirees should also know their best age for moving and their length of stay in the new location, and consider whether they have plans to relocate again.
How to reap free retirement cash
Clients should make sure to take advantage of employer match in retirement plans because they are “free money,” according to this article in Forbes, because they are doubling their investment without the additional effort. Plans also have tax advantages: Traditional 401(k)s are made with pre-tax dollars, while Roth 401(k)s allow for tax-free withdrawals upon reaching the age of 59 ½.
3 things to know if clients are planning to work in their 70s
People looking to work into their 70s should remember that they still need to take required minimum distributions by age 70 ½ even if they are working, according to this article in Motley Fool. They should also claim their Social Security benefits by age 70 because the benefit will not increase once they reach that age. They should also be aware that they could face bigger taxes due to their RMDs, Social Security benefits plus their other sources of income.