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The flawed advice being peddled about saving for retirement

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

The flawed advice being peddled about saving for retirement
Contrary to what many retirement investors think, clients can expect investment returns through compounded growth as long as they don’t lose from a market downturn, according to this article on MarketWatch. “The ‘power of compounding’ only works when you do not lose money,” an expert explains. “When imputing volatility into returns, the differential between what investors were promised (and this is a huge flaw in financial planning) and what actually happened to their money is substantial over long-term time frames.”

Stats on defined contribution plan participation

A college town may be the perfect place to retire
A college town can be a great place for retirees to relocate, as it may offer a lower cost of living that can help them stretch their savings, according to this article on MarketWatch. Living in a college town also allows access to various events and cultural activities, people of diverse backgrounds, retailers, restaurants and easy access to healthcare services. There may also be job opportunities for retired workers.

The 401(k) mistakes you may not realize you're making
One of the mistakes 401(k) participants are making unconsciously is not contributing enough to get the employer’s matchy, according to this article on Motley Fool. Many also fail to account for the fees they need to pay when picking investments within the plan. Borrowing or taking early withdrawals from the plan can also be a bad move, as workers will miss out on compounded growth on the investments.

Will lower earnings next year reduce clients’ Social Security retirement benefit rate?
Some seniors who intend to continue working past their full retirement age at a lower wage won't see any reduction in their Social Security benefits, according to this article on Forbes. Retirement benefits are computed based on the worker’s highest 35 income years. While the benefit will not be reduced even if their income drops, it could still increase if they make more than they did in those top 35 years.

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