Our daily roundup of retirement news your clients may be thinking about.
The gig economy offers baby boomers the opportunity to make extra money to cover their living expenses, and retirees should take advantage of this to augment their income, according to this article on Kiplinger. However, retirees are advised to find the gig work that suits them, and have realistic expectations about the work they do. Jobs in the gig economy do not provide steady income as well as traditional workplace benefits. They also need to keep track of their income and expenses, and make quarterly tax payments to avoid issues with the IRS.
Clients who are in their 50s can contribute a bigger amount to their retirement plans, and they should max out the limit to boost their retirement prospects, says an expert in this article on Motley Fool. They are allowed to contribute $6,000 more into the 401(k) and an extra $1,000 in the IRA when they turn 50, the expert says. Reaching the age is the time in their life when they will have more free money, as children move out and live on their own, the expert explains.
Young workers who switch jobs more often than necessary may be putting their retirement security in jeopardy, as they may not stay long enough in the company to be eligible to participate in the employer's 401(k) plan, according to this article on USA Today. They would also lose the employer's match if they fail to meet their plan's vesting period. Those who have assets in their former employer's 401(k) plan may want to roll over the savings into an IRA or their new employer's 401(k) plan to avoid taxes and possibly a penalty.
Retirement investors can take a distribution from their Roth IRAs even if the account exists for less than five years, according to this article on MarketWatch. However, the earnings withdrawn before the account turns five years old or before they reach 59 1/2 could be subject to tax and a penalty. For example, a 58-year-old client will face no tax and penalty if he withdraws the investment earnings in his Roth IRA when he turn 63.
A client who has reached her full retirement age can apply for her Social Security spousal benefit on her retired husband's record as soon as she suspends her own retirement benefit, according to this article on Forbes. While she can suspend her own retirement benefit and subsequently earn delayed retirement credits, she will not be allowed to collect other benefits, including her excess benefit, under the new rules.
