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Social Security strategies for clients low on savings

Retirement retirees 2 by Bloomberg News

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

Social Security strategies clients can turn to when low on savings
Seniors who have an inadequate balance in their 401(k)s and other retirement accounts are advised to boost their Social Security benefits to make up for their limited savings, according to this article in Motley Fool. To receive bigger Social Security benefits, seniors are advised to consider working longer and delaying the benefits as long as possible, according to the article. They may also move to a location where Social Security benefits are not subject to state taxes.

Do clients have to be active to have a ‘successful’ retirement?
While the concept of retirement may differ from one person to another, seniors are more likely to have a rewarding and meaningful life if they lead an active lifestyle, an expert writes in The Wall Street Journal. "Our reporting has shown, again and again, that retirees who seem most fulfilled are those who continue to search for challenges (large and small), who immerse themselves in a range of activities, and who firmly believe that their best years are still ahead of them," the expert writes. "Certainly worth a try."

How will RMDs affect clients’ tax bills?
Retirees can expect an increase in their federal tax bills when they start taking RMDs from tax-deferred retirement accounts, as these distributions are considered taxable, according to this article in Newsday. Depending on how much the mandatory distributions will boost their taxable income, retirees may also see an increase in their Medicare Part B and D premiums. That's because these premiums will be computed based on their federal tax returns two years ago.

Will clients' continued income reduce Social Security spousal benefit?
A spouse who files for Social Security at their full retirement age can expect their benefit payout to be based on whichever is higher between their own primary insurance amount or 50% of their significant other's PIA, if they're already collecting their own retirement benefit, according to this article in Forbes. If a client's husband or wife continues to earn a wage income, they may also see an increase in their benefit payout, in case the client's spousal rate is bigger than their own retirement rate.

Just over one in 10 advisors uses a digital investment tool. This, and other findings of Financial Planning’s 2019 Tech Survey.
December 1

Handcuffing clients’ beneficiaries with annuities
A lifetime income annuity is one instrument seniors can use to control how their heirs will spend the legacy they leave behind, according to this article in TheStreet. That's because an annuity will serve as a financial "handcuff" that will prevent "directionless" loved ones from splurging their inheritance, as annuity payments will be spread out over time, according to the article. When using an annuity for this purpose, it is important to get advice from a tax professional to ensure the product will be used properly as an estate planning tool.

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