1 simple New Year's resolution for stronger retirement savings

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1 simple New Year's resolution for stronger retirement savings
Switching to a Roth IRA or Roth 401(k) is a New Year's resolution that clients should consider making for the coming year, according to this article on Forbes. While clients make after-tax contributions to a Roth account, investment growth and distributions are not subject to tax. With a non-taxable income from a Roth IRA or Roth 401(k), clients will have the funds to cover the tax liability on required minimum distributions that they are mandated to take from their traditional retirement accounts starting at age 70 1/2.
Social Security checks are being reduced for unpaid student debt
A report from the Government Accountability Office shows that the federal government is garnishing more Social Security benefit payments from people with unpaid student loans to recoup the debt, according to this article on The Wall Street Journal. As more baby boomers are heading to retirement, the garnishments are likely to accelerate in the coming years. “I believe this is the tip of the iceberg of what may be to come if we don’t work harder on this problem,” says Sen. Claire McCaskill, D-Mo.

Why you should make a charity the heir to your IRA
Clients should consider naming a charity to be the beneficiary of their IRA, and leaving the assets in their taxable accounts to their loved ones, according to this article on Kiplinger. As the IRA beneficiary, the chosen charity will owe no taxes when withdrawing the funds from the account. Their loved ones also face no tax liability on their bequest, as they get a step-up tax basis on the inherited assets.

The perfect retirement strategy for 50-somethings
With a decade away from retirement, people in their 50s can prepare for their golden years by getting rid of high interest debt and paying off their mortgage, according to this article on Motley Fool. They are also advised to prioritize their nest egg more than saving for their children's education, making the most of the catch-up contributions in their retirement plans. They are better off hanging on to their stock investments if they are only in their early to mid 50s, or they are in their late 50s but intend to retire at age 67 or older.

Why Roth IRAs can be ideal for millennials
Contributing to a Roth IRA is a financial move that millennials should consider as they start saving for retirement, according to this article on Huffington Post. By stashing away funds in a Roth IRA as early as they can, they give their savings more time to grow through compounding, and the compounded growth could be substantial. They also face no tax liability on investment growth and future distributions, unlike when they invest the money in a 401(k) or a traditional IRA. Moreover, unlike other retirement accounts, a Roth IRA imposes no penalty on early withdrawals.

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