KNOW: The stock sell-off from the Global Financial Crisis could set back the incomes of roughly one in four Boomers by 10% or more. But working one extra year, to age 67, would significantly increase the odds of restoring their post-retirement income, concludes an issue brief published by the Urban Institute.
DO: Share the brief with Boomer clients. The conclusions may be self-evident to you, but it may not be obvious to your clients that working only one extra year (extending their working life by 2.2%) could increase their retirement income by as much as 10%.
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KNOW: Single retirees earning more than $85,000 a year are subject to a Medicare Part B surcharge this year of $155 per month — up $44 from 2009. As inflation pushes incomes into higher brackets, the surcharge could become a major expenditure that middle-class Boomers didn’t count on seeing deducted from their Social Security checks.
DO: A trusted advisor warns clients of the risks and hazards ahead. As a fiscally stressed federal government seeks ways to fund runaway entitlement programs, it will be tempted to convert Medicare into a mechanism for redistributing even more wealth from “affluent” retirees to poor retirees than it already does. Help your clients plan accordingly.
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KNOW: Congress is considering Social Security reforms that would, according to US News & World-Report, expand benefits to low-income earners and poor widows. It’s not clear yet where the money would come from, but one obvious possibility is from more affluent Social Security recipients.
DO: As budget deficits soar and the economic outlook remains grim, anything can happen in Washington, D.C. Warn Boomer clients of the risk that the Social Security payouts they may have incorporated into their long-term financial plans could be eroded through policies designed to help the poor.
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KNOW: More than a half of all Boomers and a third of all retirees perceive a gap between what they’ve saved and what they want to spend in retirement, according to a Putnam Investments market survey. Spotting a market opportunity, Putnam has launched its Lifetime Income Analysis Tool to help clients project their retirement income and retirement needs.
DO: The Putnam tool may be very good — we haven’t seen it yet — but every product vendor has an agenda. If one of your clients doesn’t have a long-term financial plan , beat Putnam to the punch. Start working on one right now.
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KNOW: U.S. housing prices will decline another 10% this year before leveling off and increasing at a modest pace of one or two percent annually for the next decade, predicts John K. McIlwain with the Urban Land Institute in a new study. Younger Boomers will lose their enthusiasm for buying second homes, and Millennials will lose their enthusiasm for buying any kind of home.
DO: Soured on real estate as an investment, Americans increasingly see their houses as a form of consumption. Prepare for a sea-change in attitudes toward building wealth. It’s up to you to make the case for investing in financial products.
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