One rule of thumb that’s commonly incorporated into financial plans assumes clients will have paid off their mortgage before entering retirement. Not only does it ease cash-flow concerns for initial retirement years, but it can also create a sense of calm as clients become debt free. To read the full article in FinancialPlanning, click: Mortgage Advice it Might be Best to Ignore.
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With the Social Security Administration’s recent update on its long-term financial health, advisors and their clients now have a new time frame for the anticipated depletion of the retirement program trust fund. Unless Congress acts, the trust fund is expected to run out of money in late 2034, at which point Social Security will be able to cover just 77% of retirement benefits. To read the full article in FinancialPlanning, click: Enough About Social Security: For Some, Pensions Are the More Immediate Issue.
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The owner of a retirement planning firm cheated dozens of investors out of $3.8 million in two related scams that included a Ponzi scheme and fraudulent stock offerings targeting elderly retirees, the SEC says. To read the full article in FinancialPlanning, click: $3.8M Ponzi Scheme Funded Spa Treatment, Maids, Church Tithes: SEC.
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Taxpayers with income that flows to or from a country that has a tax treaty with the United States should understand how that treaty’s provisions can affect their U.S. taxes. To read the full article in The Tax Adviser, click: Tax Treaty Benefits for U.S. Citizens and Residents.
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Many Americans have not saved a sufficient amount to retire comfortably. Financial advisors can help their clients determine not only when to retire, but also if they should consider working at least part time in their early years in retirement. Here are a few questions to ask to jumpstart the retirement planning process with clients. To read the full article in FinancialPlanning, click: Is Your Client Ready for Retirement.
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Companies might be able to deliver a bigger boost to their earnings per share by making pension contributions rather than using borrowed money to fund buybacks, according to a report by Goldman Sachs Asset Management. Low interest rates may encourage companies to make stock buybacks, but these rates also tend to increase pension obligations. To read the full article in The Wall Street Journal, click: Pension Contributions Could be Bigger Boost to EPS than Buybacks: GSAM.
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“Most important, pensions should be required to uphold their original intent: to keep retirees who can no longer support themselves out of poverty.” Industry leaders weigh in on retirement news your clients may be thinking about. To read the full article in FinancialPlanning, click: How to Save Public Pensions, no Federal Bailout Needed: Retirement Scan.
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IRS Proposes Rules for Closed Pension Plans The Internal Revenue Service has responded to the proliferation of closed defined benefit pension plans, which continue to cover older employees while prohibiting new employees from joining, by proposing regulations that would let the plans qualify under the nondiscrimination rules. Sally P. Schreiber senior editor for The Tax Adviser, explains. To read the full article in The Tax Adviser, click: Closed Pension Plans Could Meet Nondiscrimination Rules.
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Should Pension Participants Take the Lump-Sum Option? Traditional pensions are increasingly offering participants a lump-sum payment in lieu of monthly payments over the rest of their lives. This option makes sense in some cases, but a monthly payment can reduce the chances of running out of money in retirement. Ann Carrns explains how, unfortunately, not all employees are able to make informed decisions. To read the full article in The New York Times, click: Carefully Considering Pension Payment Options.
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High account balances is an often overlooked risk related to sequence of returns especially for investors within five years of their retirement. Ron Surz, target-date fund expert and ThinkAdvisor contributor, warns that most target-date investors are in grave peril. Read more about why sequence of returns is so risky in this article at ThinkAdvisor.
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A Credit Card Debt is Settled, But Tax on DOI Income Still Due Judge Ruwe at the Tax Court finds petitioners owe tax on income from a settled credit card debt in Shepherd v. Commissioner, and a U.S. Bankruptcy Court for the Western District of Pennsylvania rules on the valuation of a mortgagee’s creditor’s secured claim in Buena Vista Oceanside, LLC., v. Optimum Bank