As our country is dealing with the growing coronavirus pandemic, the federal government put in place a $2 trillion relief package to address the economic crisis resulting from the global economic slowdown. The most common questions we are receiving relate to the direct payments of benefits taxpayers will receive and how the rules relating to retirement distributions and unemployment have changed. We will focus on these changes now.
The world is headed toward a retirement crisis, and America is no exception. A GAO report found that about half of all Americans age 55 or older have no retirement savings at all. Fortunately, HCM can help you understand the impact of utilizing one or more of the following strategies to help your retirement nest egg last as long as you do.
One piece of good news is that the age restriction limiting people from contributing to traditional IRAs after age 70 ½ has been repealed. Contributions to Roth IRAs by qualifying taxpayers were already allowed. This is a windfall, particularly to people working later in life, as they may continue contributing potentially tax-deductible contributions and letting it grow tax-deferred, until withdrawn. If an investor has earned income, they are allowed to contribute to their IRA. This provides more flexibility in planning to better optimize their after-tax returns and retirement income.
Wealth management is the most comprehensive type of financial planning services. It is the process of coordinating your family’s investment, tax, estate, insurance, and retirement plans to effectively build your family’s wealth. Clients are able to access these comprehensive services to meet their needs whether that falls under managing estate or business taxes, financial needs for retirement, advising charitable funds, or investing taxable, tax-deferred, and tax-free assets related to personal wealth.
Nearly half of all Americans worry about running out of money in retirement; it’s not surprising then, that the Employee Benefit Research Institute found that people who retired with more than $500,000 in savings on average were often afraid to spend it. Therefore, they still had about 88% their retirement nest egg left 18 years after retirement. More often than not, they were worrying about things that never happened. This means they struggled on a tight budget during, what should have been, the best years of their life.
Cognitive Biases are our brain’s natural way of helping us simplify our decision-making process. While often they are the result of ways in which our brains have adapted to make us more efficient, they can be detrimental as well, especially to our investments. Learn how our brains can trick us, what those tricks are, and how to account for them in your investments.