Welcome to Retirement Scan, our daily roundup of retirement news your clients may be talking about
What to do if your clients’ employer stops matching
Some employers are very likely to stop their matching contributions in their retirement plans to improve their finances during the coronavirus-driven economic meltdown, according to this Fox Business article. If this happens, their workers are advised to avoid making any withdrawals and continue making contributions to take advantage of the tax benefits. “As long as you can do it, you should do it. Traditionally, 401(k)s generally have some really good investment options that you wouldn’t be able to do on your own,” an expert says.
7 times it’s OK for clients to dip into your retirement fund early
Taking early distributions from retirement accounts can be a smart move if clients become permanently disabled, face mounting medical debt or start a new business, according to this Yahoo Finance article. They may also tap their retirement funds early if they want to buy their first home, cover their college costs or avoid foreclosure, according to the article. Couples who are getting a divorce may also be required to divide the funds, and the distributions will not be subject to taxes and penalties.
Are bond funds ‘broken’ as diversifiers?
Although some high-quality bond funds dwindled amidst the market downturn, most of these funds managed to deliver better returns than equities, benefiting retirees who are tapping their portfolio for income, writes Morningstar’s Christine Benz. “When it comes to diversification, whether an investment has a gain or a loss during a given period matters, but so does the magnitude of that gain or loss,” she writes. “Moreover, the recent market action underscores the importance of time horizon and anticipated holding period when deciding which bond funds to invest in, or whether to hold them at all if your time horizon is too short and you need certainty.”
3 important questions to address before your clients retire
There are questions that seniors need to address before retiring to ensure that they will secure their retirement, according to this article in Motley Fool. Before taking the plunge, seniors need to get a good sense of how much they would collect from Social Security every month. They also need to determine the amount of income their retirement portfolio would generate and to have a bucket list of activities to keep themselves busy during retirement.
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