Your clients’ retirement savings may not last as long as they think
Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
Clients’ retirement savings may not last as long as they think
Thanks to the Secure Act, 401(k) plan sponsors are required to provide participants an annual disclosure that reflects the monthly lifetime income they would receive if they opt to use their savings to buy an annuity, according to this article in The Washington Post. The data will illustrate how long their retirement savings will last, according to the article. “It is really as important for plans to get people thinking about income rather than just accumulation because you’re going to get much better results if you switch over to having people understand that at some point they’re replacing their paycheck,” an expert says.
Why clients should be thinking long-term with retirement savings
Ignoring market volatility and not making investing decisions based on market corrections may be the right strategy for clients, especially those who are investing for retirement, according to this article in MarketWatch. “Don’t get caught up in the motion of the market when investing for a long-term goal,” a CFP says. “If it makes you uncomfortable when things go down, don’t look.”
What seniors are most worried about
As many as 72% of pre-retirees say they are concerned about outliving their savings, according to a study in this Barron's article. Meanwhile, 64% say they are “overwhelmed by not being able to maintain their current lifestyle or quality of life” after they retire, while 60% say they worry about no longer receiving a regular paycheck, according to the study from Charles Schwab. “We talk a lot about investors saving for retirement, but that transition to retirement and that time right before retirement is often the most stressful,” according to an expert from Schwab. That is because “there are so many moving parts and there are so many pieces.”
This IRA move looks smarter after the stock market correction
Converting traditional retirement assets into a Roth account can be an especially smart move for clients when stock markets slow, according to this article in Motley Fool. Although a Roth conversion triggers a tax event, the capital gains taxes will be lower because the stock prices have declined. Distributions from a Roth account will not be subject to income taxes, providing seniors a tax-free source of income that translates to reduced tax burden in retirement.