The Transamerica Center for Retirement Studies recently conducted an online survey of more than 6,000 people in the U.S. and found that many are feeling financially vulnerable. Americans are feeling a distinct lack of confidence, particularly when it comes to retirement. Whether employed or unemployed, the survey found that 23% of workers are no longer certain they can retire comfortably following the coronavirus pandemic. Not unsurprisingly, the insecurity was highest for baby boomers, born between 1946 and 1964, who are closest to retirement—32% said their confidence in their ability to retire has gone down due to COVID-19. Meanwhile, 25% of
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Posts by Ryan Benning
How a Furlough (or Layoff) Affects Your Finances…and Retirement
The CARES Act: 10 Things You Should Know
The $2 trillion coronavirus economic stimulus bill is the single largest relief legislation in U.S. history, aimed at providing help for individuals and businesses affected by the outbreak. It was signed into law on March 27, 2020. The CARES Act is also known as “Phase III,” because it follows a $104 billion package passed March 18 for workers and families, and a smaller $8 billion bill to increase funding for medical treatments and testing. There is already talk of a fourth and fifth package in development in Congress. Here’s what you should know: Direct Payments to Taxpayers Americans are set
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Stock Market Volatility: It Helps to Look Backward
Obviously, many of our clients are worried about the news, the headlines about coronavirus, and the drops in the stock market happening at the time of this writing. As you know, our firm focuses a lot of attention on protecting your savings as you near retirement. But for some of our clients (depending on their unique circumstances), part of their portfolio—and/or part of their 401(k) or other retirement funds—are still subject to stock market risk. The reason for this is that based on historic return data: the stock market can offer the highest returns over time, and so might still
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Clearing Up Confusion About RMDs
Last month, we posted information about how the SECURE Act has increased the age for required minimum distributions (RMDs) from 70-1/2 to 72 starting this year, 2020. If you turned age 70-1/2 in 2019, your RMDs were required for the 2019 tax year, and WILL BE required for 2020, 2021 and every year from now on. For everyone turning 70-1/2 in 2020, your RMDs will not be required until the year you turn 72, even if you have received notification from your custodian to the contrary. Because the law was passed and became effective within two weeks of passage, automated
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5 Things You Need to Know About the SECURE Act
The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) became effective Jan. 1, 2020. Here are the top five things you should know. 72 is the new 70½ The SECURE Act raises the age at which retirees must begin taking Required Minimum Distributions from the awkward age of 70-1/2 to an even age 72, allowing for a couple more years of growth before RMDs kick in. NOTE: Anyone who reached age 70-1/2 in 2019 or before is subject to the old rules. You can keep making contributions to traditional IRAs The act repeals the age limitation for making
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The Rules Are Changing For Your 401(k) In 2020
If you’re still working and contributing to a 401(k) or similar workplace retirement plan, there is some good news for the upcoming year. If you’re under age 50, the amount you can contribute to your 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is now $19,500 for 2020—a $500 increase over 2019. Additionally, for those who are age 50 or over by December 31, 2020, the catch-up amount is now $6,500, up by $500 (and the first increase since 2015). Keep in mind that you can still put away an additional $6,000 in an IRA—$7,000 for
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Does Your Retirement Plan Include Inflation Risk?
Inflation may not always be top of mind when you think about planning for retirement. Of course, you will likely consider your current expenses, but you need to account for what the costs of those expenses could be over time. None of us can predict the future, but we can plan. Inflation diminishes purchasing power over the years and increases the costs of services that retirees and pre-retirees need. Given that more Americans are living longer, it can pay dividends to include inflation risk in your overall planning. The other issue we have to contend with when it comes to
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Wish the IRA a Happy Birthday!
It can provide many gifts as part of a comprehensive retirement plan. The Individual Retirement Account (IRA) turned 45 on Labor Day. On September 2, 1974, the Employee Retirement Income Security Act, or ERISA, was enacted into law, introducing broad safeguards to protect employee savings in both defined benefit plans like pensions and defined contribution plans. The intent of Congress in initially establishing IRAs was to provide a tax-advantaged retirement savings plan for those workers at businesses that weren’t able to offer pensions. The IRA also made it possible to preserve the tax-deferred status of qualified plan assets when an
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Does Your Plan for Retirement Include a Backstop for Unexpected Financial Setbacks?
Cuts in pensions, death of spouse could lead to a wobbly three-legged income stool. Imagine receiving a letter in the mail informing you that your monthly pension benefits were at risk of being cut by 40%. Would you have enough income to keep up with your expenses? What about maintaining the quality of your lifestyle? Questions like these place the importance of retirement income analysis at the front and center of being prepared for the unexpected. The three-legged stool metaphor of retirement planning, in which Social Security, employer pension and savings work together to provide secure income has evolved over
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