What should retirees do if the market goes against them: Opinion

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What should retirees do if the market goes against them: Opinion
Investors cannot be sure of their investing decisions, as recent trends show that the stock markets are unpredictable and can defy expectations, writes an expert for MarketWatch. Market valuations may not be a reliable tool to use to make investing decisions. "I think it’s prudent for retirement savers to assume low investment returns and sock away extra money to compensate — and I believe it’s wise for retirees to stand ready to cut their spending for a year or two, should the markets go against them."

Why converting to a Roth IRA can help
Some clients are likely to move to a higher tax bracket in retirement, so directing all savings to a traditional IRA or 401(k) may not be a smart move, according to this article from Kiplinger. That's because while they get upfront tax deduction for the contributions, their distributions would be taxed at a higher tax rate in retirement. To avoid this, they should consider converting a portion of their traditional retirement assets into a Roth, which offers tax-free growth on savings and tax-free withdrawals.

How to plan for taxes in retirement
Tax planning is important for clients to reduce the tax bite on income in retirement, according to this article on CNNMoney. To do this, clients should determine their cash flow needs and identify their possible sources of income. They should also sock away money in investment accounts with different tax treatments and take taxable distributions during the tax window, when they are in a low tax bracket. This strategy will reduce their taxable income and subsequently their tax bill in the future.

The easiest thing to do with an old 401(k) is as little as possible
Clients with multiple 401(k) plans will be better off rolling old retirement assets into a new plan, according to this article on CNBC. Those who want to do 401(k) rollovers should opt for a trustee-to-trustee transfer to avoid receiving the check personally. An expert says clients will not get any benefit and may face a more complicated situation if their old 401(k) provider sends them the check. For example, the check will be treated as a taxable distribution if the check is not mailed to the new plan within 60 days.

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