Advisors Share Common Retiree Financial Mistakes

Mar 22, 2019 /

Saving and investing for retirement is probably the single most important issue for the clients of financial advisors, and outliving their retirement funds is a primary worry. Despite these priorities, however, mistakes are made, often before a client even hires an advisor or afterward, when the client fails to follow through on the advisor’s recommendation or outright opposes it. ThinkAdvisor asked financial advisors about the biggest mistakes they’ve seen retirees make. Here are their answers.

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On Disability and Facebook? The Government Might Be Watching

Mar 19, 2019 /

The Trump administration has been quietly maneuvering to use Facebook and Twitter to spy on people collecting federal disability payments, The New York Times reported. Social Security revealed in a budget request last year that it planned to study whether to use surveillance of social media to “expedite the identification of fraud.” The paper cited unnamed sources who said the White House and Social Security officials have been working since then to strengthen the proposal.

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The Impact of Longevity on Clients and Advisors

Mar 15, 2019 /

This Schwab Advisor Services study looks at the dynamics shaping the independent advice industry with the goal of shining a light on the opportunities and challenges facing RIAs. They asked advisors to look beyond the immediate forces influencing the advice and wealth management space, and to consider six larger trends currently being navigated at the individual and societal level. Namely: increased human longevity, changing workplace dynamics (automation, changing job skills), medical advancements, information privacy and data integrity, artificial intelligence (AI), and climate change. “Longer client lifespans” was seen by advisors as the leading dynamic that could impact advisory firms in the decade to come. Here are some more findings from the study:

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Failure to Contribute: Independent Workers and Social Security

Mar 12, 2019 /

While existing research has focused on the size, growth trajectory, and labor and tax law implications of independent contractors, freelancers, and workers selling goods and services online and through app-based platforms (the “on-demand” economy), less work has been devoted to quantifying the Social Security implications. The existing reporting rules applicable to most workers earning income in the on-demand economy substantially increase the likelihood that these taxpayers are failing to contribute to Social Security and Medicare through payment of the self-employment tax (SE tax).

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How 11 Types of Retirement Income Are Taxed

Mar 8, 2019 /

When your clients are planning for retirement, it’s fun to contemplate all the cruises, rounds of golf and restaurant meals they have ahead of them. They’ve earned it! However, many retirees don’t take into consideration the cumulative impact of federal and state income taxes on withdrawals from their nest eggs. Unfortunately, most forms of retirement income—including Social Security benefits, as well as withdrawals from 401(k)s and traditional IRAs—are taxed by Uncle Sam.

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Does the New House Medicare-for-All Matter?

Mar 5, 2019 /

Members of the House last week offered their version of a “Medicare-for-all” bill that is broader than what’s been put forth by Sen. Bernie Sanders (I-Vt.), whose 2016 presidential run pushed the issue into the political mainstream. In many ways, the proposal sounds familiar: The government would establish a health plan that pays for basically all forms of medical care for all citizens. But there are difference, too, some of which would affect seniors in particular.

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Retirement Planning Means Seeking Tax Equilibrium

Mar 1, 2019 /

One of the most fundamental reasons for saving and investing is to accumulate enough assets to achieve a point of “financial independence,” where there’s no longer any need to work for income, and instead, the individual can support themselves solely from their available assets and other retirement resources. The caveat, however, is that accumulating substantial wealth can potentially accumulate significant tax consequences to go with it.

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Social Security Scams a Growing Threat to Retirement

Feb 26, 2019 /

As the Social Security Administration strives to serve more customers online, the agency and current and future Social Security beneficiaries face the growing threat of cyber attacks. Social Security identified nearly 63,000 likely fraudulent online benefit applications in fiscal 2018, according to the agency’s Office of the Inspector General, up from just 89 in fiscal 2015. From February 2013 to February 2016 (the most recent data available), the Inspector General received more than 58,000 fraud allegations related to My Social Security accounts—an issue that persists today, according to the OIG. Meanwhile, there has been exponential growth in Social Security imposter scams, in which fraudsters claiming to be Social Security staffers contact victims—often via robocalls—and try to extract money or personal details. More than 35,000 people reported such scams in 2018, according to the Federal Trade Commission, up from 3,200 a year earlier.

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Retiring Earlier Than Planned: What Matters Most?

Feb 22, 2019 /

Many people have all the best intentions of working longer and delaying claiming Social Security. But more than a third of older workers retire earlier than planned. The question is, why? This Center for Retirement Research brief looks into the most common factors.

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Social Security Reformers “Celebrate” the Day Millionaires Stop Paying

Feb 19, 2019 / 1 Comments

For those who advocate eliminating the payroll cap for Social Security taxes, February 18 is “Valentine’s Day for millionaires,” the day when last of the millionaires in the United States will stop contributing to Social Security for the entirety of 2019. The richer they are, the earlier their gift arrives: Based on his 2016 income, President Trump ceased contributing to Social Security just 40 minutes into the new year. This year Senator Bernie Sanders introduced a new Social Security bill and the Center for American Progress and the Center for Economic and Policy Research released reports to mark the day.

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Women Facing Financial Challenges for Retirement

Feb 15, 2019 /

The financial challenges women face to achieve financial security in retirement can be huge, as a Senate Special Committee on Aging hearing and an Employee Benefit Research Institute (EBRI) briefing last week demonstrated starkly. And with the rising cost of health care, as well as other deep-seated economic factors at play, the anxiety has heightened considerably. Fortunately, as the Senate hearing and the EBRI briefing demonstrate, women’s financial security is on the front burner in political and public policy discussions.

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House Ways and Means Committee Talks About Retirement Income Security

Feb 12, 2019 /

A four-hour hearing on retirement income security before the full House Ways and Means Committee broadly focused on options for making Social Security actuarially sound, expanding savings vehicles in the private sector retirement system, and rescuing the roughly 130 collectively bargained multiemployer pension plans that face impending insolvency. For retirees and their advocates, private sector retirement industry stakeholders, and policy experts across the ideological spectrum who fear retirement reforms may not be prioritized under divided government, the hearing was a strong start.

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Caring Companies Needed

Feb 8, 2019 /

American companies are facing a caregiving crisis—they just refuse to acknowledge it. Rising health care and professional caregiving costs and changing demographics over the past few decades have put great pressure on American employees as they try to balance work and care responsibilities. Yet many employers remain largely oblivious to the growing costs of this hidden “care economy”—costs that hurt employers and employees alike.

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Social Security COLA: What Inflation Measurement is Best?

Feb 5, 2019 /

Senior citizen activists and others who oppose using the chained CPI-U to calculate the Social Security cost-of-living adjustment (COLA) just got some government support for their argument. The Government Accountability Office studied hypothetical COLA levels over the 30 years from 2003 to 2033, using calculations linked to the Chained Consumer Price Index for All Urban Consumers (CPI-U), the CPI-E (the E stands for elderly) and the CPI-W (for Urban Wage Earners and Clerical Workers), which is the current standard. It found that that the COLA would decrease by an average 0.25% per year if the Chained CPI-U were used instead of the CPI-W, and the total loss would top 7% after 30 years.

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Using Biological Age to Plan Retirement

Feb 1, 2019 /

“Your true age is not the number of years you’ve circled the sun,’ says Moshe Milevsky, a professor of finance at York University in Toronto. “Your true age is determined by your body and scientists are working very hard how to measure this thing called biological age.” There are numerous ways of measuring biological age, but scientists, he argues, are becoming increasingly accurate in their life expectancy predictions based on it. Milevsky is the author of the forthcoming book Longevity Insurance for a Biological Age, in which he describes retirement planning using biological instead of chronological age.

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Is Phased Retirement A Good Fit for Your Clients?

Jan 29, 2019 /

Shifting from a full workload to an open schedule upon retirement is a drastic change, and many baby boomers don’t want such an abrupt transition. Some employers also want older employees to pass their valuable skills on to younger workers before they leave. A phased retirement, which consists of full-time employees moving to part-time schedules, could be a viable solution for employers and older workers alike.

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This Social Security Reform Bill Could Be Going Somewhere

Jan 25, 2019 /

Washington is going through major changes in the wake of the 2018 election, with Democrats taking control of the House of Representatives for the first time since 2010. As a result, many proposals on key issues that have gone nowhere for years are suddenly getting new life, and even with divided control of the government, it’s possible that some of those proposals could get some forward momentum. One such proposal is Social Security reform propsed by Rep. John Larson (D-Conn.).

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2019 Hot Topics in Retirement and Financial Wellbeing

Jan 22, 2019 /

Alight, a provider of workplace health and wealth solutions, has published a new report that looks back at 15 years of surveying employers about the benefits they offer. You can find the 2019 report here. A brief summary follows.

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Will You Miss My Bitcoin When I’m Gone?

Jan 18, 2019 /

Digital security has never been so important or perhaps so easy. You can unlock your phone with your fingerprint or your face. You can use a password manager to store all your login credentials behind a single master password. And you can secure many online accounts with two-factor authentication (where a website sends a one-time code to your phone). But all that security comes at a cost when you die or become incapacitated. If you haven’t planned ahead, your loved ones could find themselves shut out of your digital accounts. And that could cause problems ranging from the trivial (their losing access to your Netflix watchlist) to the tragic (their losing access to your family photos on Flickr). They may not even know which financial or retail accounts you have, since so many companies encourage customers to sign up for email delivery of statements.

Welcome to the new frontier of digital estate planning.

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Employers Express Limited Understanding of When Workers Will Retire

Jan 15, 2019 /

Faced with a significant number of employees at or nearing retirement, and the resulting loss of valuable older workers, U.S. employers are rethinking their approach to managing the retirement patterns of their workforces, according to a new survey by Willis Towers Watson. The 2018 Longer Working Careers Survey found the vast majority of employers (83%) have a significant number of employees at or nearing retirement. However, only half (53%) express having a good understanding of when their employees will retire. Additionally, while 81% of employers say managing the timing of their employees’ retirements is an important business issue, only 25% do this effectively.

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