Our daily roundup of retirement news your clients may be thinking about.
Data from the U.S. Government Accountability Office show that more than 25 million workers resigned and left at least one retirement account with their former employer between 2004 and 2013, according to this article on Kiplinger. Based on estimates from the University of Massachusetts Boston Pension Action Center, retirees have not received more than $150 billion in pension benefits. “It’s incredible and shocking. This is money that people earned,” says an expert with the center.
Data from the Individual Retirement Arrangement show that just over 13,000,000 out of 157.4 million taxpayers, or only 8.3%, opted to make contributions to an IRA in 2015, according to this article on Motley Fool. Those who decided not to contribute to an IRA had various reasons. For example, some of them saved have already enough while others would not qualify for the tax deductions on the contributions because of the income limits. Other taxpayers had lame excuses, such as not having extra money to sock away in the account or feeling too young to start saving for the golden years.
401(k) participants who also contribute to an IRA may not qualify for a tax deduction and face a tax bill for their IRA contributions, according to this Q-and-A article on Los Angeles Times. The tax deduction for IRA contributions starts to phase out at $63,000 (101,000 for joint filers) and is gone at $73,000 ($121,000 for those filing joint returns). Clients who want to reduce their tax bill are better off contributing to their 401(k) plan while those who expect to move to a higher tax bracket in retirement should consider funneling money into a Roth IRA.
Findings from the Fed's 2016 Survey of Consumer Finances clients aged 45 to 74 have incurred more student debt than their younger counterparts, according to this article on Money. Clients who are younger than 35 have $32,900 in student debt, while those in the 45-54 and 65-74 age groups owe $37,000 and 435,000 on average in education-related debt, the survey found. “The spiraling cost of college education is stretching families. And one of the responses to that is parents and grandparents are more likely to take out these educations loans than they might have been in the past,” says an expert.
Seniors who reach their retirement age should forgo the traditional concept of golden years if they feel they are not yet done with their career and have yet to accomplish something, writes an expert with Forbes. This means redefining retirement based on their desires and circumstances, writes the expert. "In this new era of retirement, turning a traditional retirement age can be overwhelming for some people, but it doesn't have to be as long as you accept that you're different, commit to following your heart, and surround yourself with like-minded people."
