“Change is the only constant.” You’ve probably heard this expression before. I believe it is sometimes attributed to the Greek philosopher Heraclitus, but it gets used often as a business mantra or by people who are seemingly always in motion. It’s also a reminder that despite our best efforts at times, change happens. I’ll admit, change can be scary, but it can also be a wonderful thing. It can force us to reflect on where we are and where we want to go. It can also provide us with an opportunity to try new things and make decisions that we have been putting off. For example, changes in the markets can force you to re-evaluate your investments and portfolio (did you really think I wasn’t going to tie this back to investing or retirement planning some way? lol.). That can be a really good thing. Markets are prone to change as companies come and go and stocks trend up and down. As such, you will need to buy and sell investments from time to time, especially if you are investing for the long-term. Same goes for your retirement planning. Over time, your benchmarks and goals will change and you will need to act accordingly. Yes, it can be a bit scary to think about having to pivot your retirement saving plan, but it can also be exciting. It can be refreshing to have a new interest or goal that fits with what you want more than what you currently have. It really all depends on how you look at it. Change can be a wonderful thing, are you ready for it when it eventually comes?
If you’re serious about saving for retirement, then you’ve probably done a lot of research and reading about the strategies you can use to do it, the tools the use, and things to look out for. Over time, that knowledge can really build up and it can be tough not to want to share it with family and friends. Guess what? There’s nothing wrong with that. After all, knowledge is power. That means the more you–and in this case, others–know the better you can be when it comes to making financial and retirement decisions. Now, before I go any further, I want to caution to you to be careful when it comes to giving advice regarding taxes or particular investments. Furthermore, if you find that you’re gathering a large following or are taking payment in return for financial advice, you should be very careful and maybe should consider becoming a financial advisor or wealth manager so as to protect yourself and get the credentials needed. In regards to taxes or tax-based strategies, you can potentially open yourself up to some legal liability, particularly if you are not properly credentialed to do so and if things go south (in other words…don’t mess with people’s taxes or tell them what to do with their taxes if you’re not a CPA). Anyways, in regards to sharing your knowledge, maybe you’ve learned some really great tips from an financial advisor or maybe you really like crunching numbers and want to help others who aren’t so skilled. Don’t be afraid to share your knowledge and skills to help others obtain a better grasp of their finances and retirement savings. Even if it’s just a matter of helping a friend set up a spreadsheet to track their expenses or helping a family member research an investment opportunity, you can share what you know and help others. Of course, if you aren’t comfortable with helping others with financial planning or preparing for retirement, you could also always just pass on the name of a reputable wealth manager or financial advisor.
I was recently reading an article that discussed the impact one’s health can have upon their retirement and retirement savings. This article wasn’t about the cost of healthcare in retirement and aging, but rather how living a healthy lifestyle can be really helpful when it comes to retirement and how it’s not impossible to do. When many people connect health and wealth in retirement, the conversation just about always centers around the cost of aging–things like medications, assisted living, visits with specialist doctors. Very few people talk about living a healthy lifestyle–both before retirement and once you reach retirement–and how that can make your nest egg go farther and your overall wealth increase. Yes, healthier people tend to be more successful professionally and tend to make more money. When you make more money you can build up a bigger nest egg! Doesn’t that sound nice? Realizing the way your health may impact your retirement savings can be huge from a planning standpoint as well. If you know that you may be susceptible to certain conditions or diseases (i.e. through genetics or lifestyle), then wouldn’t you want to plan for that? Of course you would. Now, if you aren’t living the healthiest lifestyle at the moment, don’t fear, it’s never too late to start. What matters is that you take the steps necessary to get healthy. How do you think your health might impact your wealth?
Saving for or financially planning for the future can be a daunting task. Whether you’re in your twenties and saving for a house or in your forties and kicking your retirement savings into high gear, saving enough to meet your goals can seem impossible and overwhelming. Furthermore, if you have debt to manage and expenses to pay in order to get your finances into proper shape. Many people struggle with this and it’s the reason why I–and the industry I work in–exist. There’s no shame in asking for help when it comes to money. Finances can be tough to manage and they can easily get out of control of you don’t have a plan or understand what your priorities need to be. In such instances, a good financial planner can set you on a path to success by providing you with the knowledge and tools you need to get things in order. Many Americans think they can go it alone when managing their finances or are too embarrassed if they have debt or little savings. For some it works, for others…not so much! If you are one of those embarrassed about your money situation, don’t be. There’s probably more people out there struggling with money than you realize. Even if you have a good grasp of your finances and feel you’re doing well managing your debt and saving for your future, there’s still no reason not to talk with a financial expert. They may be able to suggest investments and ideas for further expanding your wealth or ways to save you more money. So, when was the last time you got help with your finances?
This Coronavirus pandemic is changing everything. Sure, you can tell yourself it’s only temporary and convince yourself that things will soon return to normal, but it’s highly unlikely that will happen (however, there’s nothing wrong with a little optimism!). For those of you Boomers out there getting ready for retirement, it will be different. First off, of course, is the fact that the economy and markets seem to have taken a turn. Yes, we are in a recession. That’s usually not a good thing, especially if you are planning on your portfolio or investments to keep making you money in retirement. On the flip side, if you are savvy with investing, this may be a chance to set your portfolio for when the markets rebound (not sure of when, though). This down market may lead to slower nest egg growth for Boomers who are still working and starting to think about retirement. This may lead Boomers to work longer, which may be more difficult than intended. It’s not uncommon for Boomers to be the ones forced out in favor of younger workers at companies when times get tough. On top of finances, you goals and desires for retirement may change as well during these times. Luxurious vacations may not be a thing to a while (particularly cruises) and many retirees may place more emphasis on spending time with family. You may even already find yourself re-assessing your retirement needs and desires as you read this. There’s nothing wrong with that. Just remember, that the vision and expectations of retirement change from generation to generation and it’s currently changing for the Boomer generation. Are you ready for the new retirement?
There are many reasons why people retire. There are also many reasons why people continue to work well into what some consider the “retirement years”. If you are one of those people working well into your 60s or 70s–or have decided you want to continue working well into those age ranges–what keeps you motivated to stay in the working world? In recent years, many have said that health and retirement benefits are a big factor for staying employed. For others, it can be the social aspect of the office that keeps them motivated to keep working. Some may have no choice but to work so as to pay off debts or build up a bigger nest egg. If this current recession that we are in remains for a prolonged period, many older workers may continue working so as to be able to afford retirement. Such decisions were common as well a little over a decade ago when we went through our last serious economic downturn. Whatever your reason for continuing to work into your golden years, just make sure that you fully embrace your decision and that you are doing so for the right reasons. Also, don’t lose sight of retirement and the wonderful time that it can be for you. Set retirement goals and celebrate when you meet them.
Wow, 2020 has been a wild ride so far. We started the year off with what seemed like a strong stock market, solid economy, and no fears of COVID-19. That quickly changed less than three months into the year as much of the country came to a standstill after Coronavirus reached our shores. It’s fair to say it’s been a bit of a rough ride since then. It’s also hard to say what the rest of the year will bring. However, 2020 has also brought some big changes to retirement saving and planning. First off, the SECURE Act was signed into law in late December 2019 and while the changes it brings about might not be immediately felt, it could have a big impact of how people save and when they plan to tap into their retirement accounts. Then, in late March, Congress passed Coronavirus-related legislation that waived required minimum distributions (RMDs) for 2020 and allowed for penalty-free Coronavirus distributions in certain situations. These changes are more immediate and can could provide relief for those out of work due to state shutdowns or layoffs. As we move into the second half of 2020 there is still a lot of uncertainty regarding what the future may hold. We are still struggling to maintain COVID-19 and there are differing views about how to combat the virus. It remains to be seen if further economic relief or short-term allowances may be needed to help people get through these times. So what does this all mean for you? Well, this is a good chance to really think about your retirement savings as well as get a little creative when it comes to saving. If you are nearing retirement, maybe you want to take advantage of the push back of RMD age that was part of the SECURE Act. Or maybe, if you find yourself not back at work yet, maybe you start thinking about your next career–possibly something you can do in retirement. Now is also a good time to assess your retirement savings plan and make sure it can still get you where you want to go and make the changes you need to. What will the second half of the year bring for you?
It’s tough times out there for many Americans. We’re seeing record numbers of people filing for unemployment. For those who have lost jobs, it can be scary to think about where the finances will come from to continue paying things such as rent, mortgages, grocery bills, etc. Thus, during these times, it can be tempting to tap into retirement savings, especially if you have managed to build up a decent-sized nest egg. While I strongly, strongly discourage you from using your retirement savings to get you through these tough times, I realize that it may really be the only option for some. If you find that you absolutely are certain you will need to take some money out of your nest egg to get you through a jobless period, there are some new provisions in the CARES Act recently passed by Congress that can help you. First off, Congress has increased the amount you can take out of your employer-sponsored 401(k), if you have one. The limit used to be $50,000, but they have temporarily expanded it to $100,000 and will allow you to suspend payments on repayment for up to one year. It also allows for the terms of the loan to be stretched from five to six years. Again, this is all temporary under the CARES Act. Another important provision of the recent legislation is that it allows you to take a distribution from other retirement accounts you have without having to worry about the 10% penalty if you are under 59-and-a-half. It should be noted that there is a limit to the size of the distribution and that is $100,000. Now, again, I am not encouraging you to hit up your retirement savings immediately when trying to get through a period of unemployment. Rather, I’m sharing these two important provisions with you so that you are aware of the possibilities to get through tough times. Of course, if you feel that you need to tap into your retirement savings, you should consult with a retirement professional or financial advisor to make sure it’s the right decision and that you understand what you are about to do.
As my last blog post mentioned, it’s a tough time to be making retirement decisions. That’s regardless of whether it’s changing your retirement saving goals, deciding to actually retire, or making financial decisions in retirement. Make no mistake, the current economic situation will impact retirement decisions for at least the next year and probably even longer. It’s already forcing many older and retired Americans to make decisions about whether they should consider taking money out of their retirement accounts earlier than anticipated as well as whether they should file for Social Security sooner than they want to. Keep in mind that during the last recession–back in 2008/2009–Americans over the age of 62 saw a noticeable uptick in those filing for Social Security. Furthermore, when it comes to Social Security, you’re monthly payments increase the longer you wait to file, which is why many retirees try to not receive Social Security benefits until they are closer to 70. In regards to other retirement finance sources, many retirees face a tough decision about which accounts to tap first if they have more than one. And if they’re forced into retirement a few years sooner than anticipated, the nest egg might not even be where it is supposed to be for a post-work life. These can be stressful decisions and need to be carefully thought out. If you need help with making retirement-related decisions during this day and age, you should speak with a certified financial planner or wealth manager.
People are losing jobs. It’s what happens when the economy takes a turn for the worst. For those over 50, right now can be a downright scary atmosphere. Not only are people losing jobs, but it’s getting harder for those over 50 to get either their old jobs back or a similar job. This was true back after 2009–after the most recent recession–and it’s true now. For many people over 50, especially those over 60, they may just choose to stay jobless after all this is over; they’ll essentially retire. They will effectively be forced into retirement. Now, that doesn’t sound like the worst scenario, but it can be a nightmare. Imagine saving up for a particular retirement and setting plans and goals and then being forced to start tapping into your savings years before you intended to. Suddenly, that nest egg might not seem so large and you weren’t mentally prepared to exit the workforce. This probably is not ideal for many and will likely cause many older Americans to start tapping into their retirement funds sooner than anticipated. It will also force many Americans to reassess their retirement plans and to make changes to how they planned to live out retirement. It can be somewhat traumatic to have to change plans that you had been working towards for years, or even decades. If you do find yourself facing an early retirement, don’t freak out. Take a deep breath and think about the options available to you and whether they fit into your life plans. Can you get by on unemployment for a while? Is now a good time to switch industries or find work in another area? Would it really hurt to start taking money out of your nest egg now? Thinking about these questions can help you either fight the urge to retire or allow you to slide into retirement in a calmer mood.