Should clients delay Social Security or hit go?
Social Security: Delay or hit go?
While delaying Social Security can maximize retirement benefits and boost income, some clients have financial circumstances that make an early retirement a better option, according to this article on Kiplinger. For example, for couples with a big age gap, the lower-earning spouse may want to start collecting a spousal benefit at age 62 while the spouse with the higher income delays his retirement benefit until he turns 70. Clients may also file for their retirement benefits if their investment accounts offer a higher rate of return than what they get if they delay the benefit.
How to live out your childhood dreams during retirement
As people expect to have a longer life span, many baby boomers tend to rekindle their childhood dreams and pursue activities that they have been wanting to do, after leaving the workplace for good, according to this article on MarketWatch. Clients should determine their desired lifestyle in the golden years so they can save enough to cover their necessities and fund their hobbies and interests, says an expert. “More people have to readjust the notion of what retirement is. We thought of it as a day where we just stop working.”
How do the extra Medicare premiums for high earners work?
Medicare beneficiaries with modified adjusted gross income exceeding $85,000 (singles) or $170,000 (joint filers) annually face bigger premiums, according to this article on Money. The MAGI for Medicare purposes combines the beneficiaries' adjusted gross income and tax-exempt interest, says a certified public accountant. Social Security uses the most recent tax return to compute the MAGI, which means that the premiums that the beneficiaries pay are based on their earnings two years ago.
What does spending look like in poor, great, and average retirement conditions?
A study that evaluated the historical performance of variable spending strategies has shown that spending would be sustainable using the constant inflation-adjusted spending strategy and Michael Kitces’s ratcheting strategy over a 30-year horizon, writes an expert on Forbes. With either of the two strategies, retirees would deplete their wealth by the time they reach the 31st year of their retirement, the expert says. Other spending strategies analyzed in the study resulted in spending cuts in the early years and throughout the 30-year horizon, with spending dropping by half in the second half for the fixed percentage and two other strategies.
4 things millennials should know about mutual funds and retirement
Retirement investors are advised to know the tax consequences of holding mutual funds in 401(k) plans and IRAs, and in taxable brokerage accounts, according to this article on U.S. News & World Report. For instance, clients owe taxes on mutual funds held in retirement plans only when they start taking distributions. However, the case is different for taxable accounts, so clients are advised to pick mutual funds that trigger fewer taxable events.