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401(k)s haven’t helped clients save enough for retirement

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Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about.

401(k)s haven’t helped clients save enough for retirement
Tax-deferred accounts like 401(k)s are not helping Americans secure their retirement, according to a study in this Los Angeles Times article. Various factors, such as the immaturity of the system itself and wrong choices made by retirement savers, are to blame, according to research from Andrew G. Biggs of the pro-business American Enterprise Institute and Alicia H. Munnell and Anqi Chen of Boston College Center for Retirement Research. “The lack of universal coverage means that — even once the system matures — 401(k)/IRA plans will continue to fall below their potential,” researchers say.Retirement may be pricier than clients think
Clients may need to set aside more money than they originally thought to secure their golden years, according to this article from Motley Fool. That’s because they may either underestimate their health care expenses in retirement or they have no long-term care insurance. Clients may also fail to account for homeownership costs and taxes on retirement income.

What it take to retire comfortably in each state
Mississippi and Tennessee lead the states with the lowest average cost for a comfortable retirement, according to data from the Bureau of Labor Statistics in this MarketWatch article. The average cost of a comfortable retirement stands at $904,452, according to HowMuch.net, which cited the BLS data. “Regardless of where they live, most Americans are not saving enough in order to fund their retirement,” according to an expert.

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November 6

Costly Roth-conversion mistakes to help clients avoid
Roth conversions are a smart strategy for clients to lower their RMDs from traditional retirement plans, according to this article in The Wall Street Journal. Clients who want to lock in the tax savings should do small, annual conversions instead of doing it all at once, as well as pay taxes on the converted amount using funds from non-retirement accounts. They are also advised to avoid converting IRA assets that were recently rolled over from a 401(k).

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