By Penelope Wang
February 3, 2017
Chad Griffith

The White House said this week that President Donald Trump will indefinitely suspend the rollout of an important rule designed to protect retirement savers. The so-called fiduciary rule, which was scheduled to go into effect in April, would have required financial advisers working with retirement accounts to put the interests of their clients ahead of their own—a change that MONEY editors have strongly endorsed. Many advisers who charge fees, not commissions, are already subject to such a rule. But brokers are currently allowed to follow a less-stringent “suitability” standard, which lets them recommend options that cost you more—and pay them more—even if a cheaper or more appropriate choice is available. If you are working with an adviser, or are planning to do so, make sure he or she follows a fiduciary standard—and be sure to do a background check. Whatever happens to the fiduciary rule, you still need to be your own watchdog.

Best wishes,

Penny

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THIS WEEK’S RETIREMENT NEWS, INSIGHTS AND ADVICE

5 Ways You Might Be Fooling Yourself About Retirement

Nearly two out of three Americans feel pretty confident about their ability to retire comfortably, according to a recent survey. That reflects a certain amount of cognitive dissonance, given the relatively low savings balance they report. Time for a reality check. Contributor Walter Updegrave highlights five key indicators that you’re probably heading for trouble—better take a look now, not later. MONEY

4 Ways to Avoid a 50% Hit to Your Retirement Savings

Since you began saving, you’ve been enjoying generous tax breaks that have boosted the growth of your 401(k) and IRA accounts. But once you reach age 70½, you have to start paying Uncle Sam—that’s when those dread required minimum distributions kick in. The cost of missing a deadline is a steep 50% penalty. So check out these tips for avoiding a slip-up. CNBC

Trump Wants to Kill the Fiduciary Rule. Here’s Why That’s a Big Deal

President Donald Trump is seeking to suspend the so-called fiduciary rule, which would require financial advisers to work only in your best interests. Brokers and others working on commission would be free to offer not-so-great recommendations, which would pay them more. A White House official compared the administration’s position to being okay with unhealthy foods on a menu, but retirement investments aren’t the same thing as a triple-cheeseburger and a 64-ounce soda. You need to watch out for advisors suggesting choices that are unlikely to help you achieve your retirement goals. MONEY

When Is It Okay to Borrow From Your Retirement Savings?

Let’s face it, sometimes there’s no choice but to dip into your 401(k) account. A medical emergency slammed you with hefty bills, perhaps, or you’re coping with a job loss. Given those needs, what’s the best way to tap your savings—a hardship withdrawal or a loan? Actuary Steve Vernon outlines the pros and cons. CBS MONEYWATCH

Why Retirement Savers Are in Better Shape Than Ever

Now for some upbeat retirement stats: The average 401(k) balance rose to a record $92,500 last year, according to Fidelity. The typical IRA balance is slightly higher, nearly $94,000. The surging stock market helped a lot, but so did consistent saving and investing, as contributor Dan Kadlec explains. MONEY

How to Give Yourself a Mid-Life Insurance Audit

Updating your insurance coverage is an essential but often overlooked part of your financial planning. Once you’re in your 50s or 60s, you may no longer need some policies, or you may want to change your coverage levels. Here’s how to give yourself an insurance audit—it could save you a lot of money. NEXT AVENUE

An End to Obamacare Could Raise Costs for Boomers and Seniors

Even if you’re not relying on Obamacare now, the law’s repeal might have financial consequences for you. Some of the provisions have held down costs for Medicare beneficiaries—remember the “doughnut hole” in prescription drug coverage? And if you do need to buy individual coverage, boomers could be charged a lot more, reports Ana Veciana-Suarez. MIAMI HERALD

One Millennial Habit That All Retirees Should Adopt

One out of four Americans pay their bills late, and the top reason is that they simply forgot. So if you tend to let those things slip, or you’re worried about having a “senior moment,” take a lesson from the millennial generation—using online bill-paying tools can save you a lot of grief. MONEY

A Housing Crisis for Seniors

As boomers move into retirement, millions will face a dilemma: how to cope when you can no longer drive safely. In most regions, giving up a driver’s license means losing your independence, as writer Allison Arief points out. Her elderly relative begged for the keys back. Some encouraging progress is being made in creating walkable living options. But transportation is a key factor to consider when choosing where you will live in retirement. THE NEW YORK TIMES

YOUR RETIREMENT QUESTIONS ANSWERED

SPONSORED FINANCIAL CONTENT

Are We Too Young to Take Money from Our 401(k)?

Q: We have a 401(k) retirement account and would like to begin withdrawing money so that our RMDs are smaller at age 70½. My wife is 61 and I am only 58 years old. What are the rules for withdrawals when one spouse is not yet 59½ years old?

A: As you note, tax law generally requires that retirement savers begin withdrawing money from their traditional 401(k) accounts and IRAs at age 70 1/2. These required minimum distributions (RMDs), which are taxable, are Uncle Sam’s way of finally getting his hands on money that has grown tax-deferred throughout your working life. Meanwhile, funds withdrawn before age 59 1/2 are generally subject to a 10% penalty, unless you qualify for one of a limited number of exceptions. READ MORE

WORDS OF WISDOM

“Not everything that is faced can be changed, but nothing can be changed until it is faced.”

–Writer James Baldwin

 

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