Welcome to Retirement Scan, Financial Planning's daily roundup of retirement news.
Tapping into retirement savings to cover unforeseen expenses should be an option of last resort, as the funds are earmarked for your clients’ financial security in the future, according to an article in Bankrate. Borrowing against a 401(k) plan or taking an IRA withdrawal is essentially not entirely a wrong move because the interest they pay on the loan will go back to their retirement account. “However, you have to realize that there are consequences and penalties, and you miss out on time in the market,” according to a financial planner.
From a tax perspective, couples may be better off staying single than getting married because of so-called marriage penalties associated with the current tax code, according to this article in The Wall Street Journal. Filing as singles could mean bigger tax savings than when clients file as married couples, especially for spouses who both earn an income. Contribution limits in a Roth IRA could also shrink for couples after marriage.
Discussing money matters with family members can be difficult, but it is integral to helping clients achieve financial wellness, according to an expert in Kiplinger. To open the topic with loved ones, clients may start with talking about bills not getting paid on time or setting up a family meeting a financial advisor. “Talking with our aging parents and our children about money and the future is critical to their financial wellness — and our own," the expert says.
Filing for Social Security benefits early is a mistake that clients should avoid to protect their retirement savings, according to an article from Yahoo Finance. They should also avoid cashing out their retirement plans ahead of time, remaining heavy on stocks as they approach retirement and making substantial withdrawals in the early part of their golden years. Seniors should consider the impact of inflation on their income, include health care expenses in their budget and feel free to dip into their savings when needed.
