Our daily roundup of retirement news your clients may be thinking about.
The government has made a health savings account a triple tax benefit to encourage investors to prepare for future medical expenses, according to this article on Morningstar. Indeed, it is the only triple-tax-advantaged vehicle in the whole tax code since contributions are pretax, money compounds on a tax-free basis and withdrawals for qualified health care expenses are also tax-free. (After age 65, HSA funds can be used for non-health care expenses, though those withdrawals will be taxable.) "Even if your plan is to run the money through the HSA and pull it out on an ongoing basis to cover health care expenses as you incur them, the tax benefit is still valuable," writes Christine Benz, director of personal finance at the financial information firm. "The HSA saver who invests her money, leaves it undisturbed to grow, and uses non-HSA assets to cover her health care outlays can take maximum advantage of the tax benefits."
The divorce rate for older couples is on the rise, and women are more likely than men to lose from the proceedings, as they allow their spouses to take full control of financial decisions, according to this article on Bloomberg. “Despite all the strides that women have made, they are still abdicating important financial decisions that will profoundly affect their futures,” says an expert. “Women and divorcees who find themselves alone wish they had been more involved in finances while they were married. Nearly all of them advise other women to get more involved early on and break the cycle of financial abdication.”
Making catch-up contributions to an IRA or contributing to a spousal IRA are last-minute strategies that can help taxpayers reduce their 2017 tax bill, according to this article on Kiplinger. That's because they have until the tax filing deadline to make the deductible contributions and count them towards their 2017 balance. Taxpayers can also contribute to a health savings, Roth IRA for their child who earned from a job, or a 529 college-savings plan and deduct the contributions on their 2017 tax returns.
Many seniors should avoid the misconception that they should file for Social Security benefits as soon as they reach full retirement age, according to this article on USA Today. That's because they have the option of deferring the benefit until 70 to boost their monthly benefit payout. They should also know that their retirement benefit will not be enough to cover all their expenses in the golden years. Although the program faces financial woes, it is going to stay, so seniors should avoid filing early just because of fear that their benefits will no longer available in the future.
