Annuities: Protecting Yourself Against Uncertain Markets

When it comes to growing and preserving wealth, it’s important to bear in the mind the volatility of the markets and how it could impact your retirement income. Fortunately, there are ways to help shield your savings from market woes. Designed to protect, grow, and provide a guaranteed stream of income is an annuity. Align yourself with less risky investment vehicles such as these that can offer upside potential and protection against the downswings. Here are some additional potential advantages to mull over:

• It creates an income floor that you can’t outlive, regardless of how long you live or how the markets perform.
• It can help cover essential expenses that Social Security and any pension payments may not.
• It grows tax-free up until your retirement.
• It can generally yield higher returns than other low risk investments, such as CDs, money market accounts, or bonds.
• It can offer more risk-taking for potentially better returns.
• It can provide a death benefit to have your income payments or account value be passed onto your beneficiaries.

COVID-19 and Life Insurance: Are You Covered?

Not too long ago, everything was normal and seemingly under control. Since then, the spread of the pathogen has shaken the foundation of the world we once knew and exposed the vulnerabilities of our health care systems. On March 26, 2020, the U.S. surpassed China and Italy to become world leader in virus cases and deaths.1 As more confirmed cases arise, this has become a somber reminder of how brittle our health can be and more importantly the value of having a life insurance policy.

Should you get life insurance during a pandemic? While the simple answer is yes, it shouldn’t take a health crisis for you to consider financial protection for you and your family. When planning for the unexpected, life insurance is one of the best tools. It can help your family maintain the lifestyle they’ve become accustomed to and provide them with greater financial security for many years ahead. And if you already have a policy in place, now is a good time to revisit your coverage to ensure it’s sufficient.

The crisis may have challenged us with a new way of living, but our world doesn’t stop. We want to assure you that our team will continue to adapt and pursue the best interests of our clients. Don’t leave your family’s future financial security up to chance.

Should I Withdraw from My 401(k) During a Pandemic?

Over the past several months, the pandemic has led many Americans to financial hardships. Individuals are fearful of how they’ll meet their financial obligations. The stimulus package may help alleviate some of the concerns, but what about those who still won’t make ends meet? When those funds have been exhausted, what options are next? As expressed in our previous communication, withdrawing from your 401(k) savings may sound tempting, but there are other alternative options. Analyze this from a case-by-case perspective:

• Reduce monthly expenses. Do you have monthly subscriptions that can be temporarily suspended or discontinued entirely to cut monthly costs? Examples include Netflix, Hulu, YouTube TV, etc. Consider keeping only one subscription that works for the entire family.
• Student loans. The stimulus package offers a six-month payment break for individuals with federal loans.1 This means individuals are automatically enrolled into this program by default. Payments will not be due within the next six months from March 2020 through September 2020. Interest will not be incurred; therefore, the outstanding amount on the loan won’t increase during this period. Borrowers are allowed to opt out of this program by calling their servicing provider.
• Utilize emergency funds. Resort to emergency funds first. In theory, this is why emergency funds were set up to begin with–a means of easy access during unprecedented times.
• Selling some stocks for immediate cash. The question of whether or not selling stocks during a crisis is smart has become a common question amongst investors. It’s important to not panic-sell. Instead, allow us to offer you a no-cost, no obligation consultation to present you with options that’ll best suit your situation.
• Refinancing student loan debt, mortgage payments, or car payments. If your student loan lender didn’t fall under the stimulus package, consider refinancing or going into forbearance. Although prolonging the life of the loan long term isn’t something we’d want to do, it can offer short term relief. This also applies to mortgage and car payments.

You work hard for your 401(k) savings plan. They’re not something that has been saved overnight but has taken many years of contribution. The value of your account could be worth much more years from now if left untouched.

CARES Act: Retirement Provisions and What They Can Mean to You

In response to the economic fallout of the COVID-19 pandemic, the CARES Act contains a number of essential measures important to the financial security of the American population. This far-reaching legislation offers protection and support to small businesses, hospitals, and individuals, such as more flexibility with your retirement accounts. Here, we’ll discuss some of the changes and the impact they may bring to your retirement income strategies:

1. Required Minimum Distributions (RMDs) are suspended for 2020. These include 401(k)s, 403(b)s, 457(b) plans, and IRAs. This gives retirees the opportunity to leave their investment portfolios alone for another year to recover losses incurred during the volatile markets. Those that have already taken their RMD for 2020, the CARES Act doesn’t allow for repayment of the RMD back to their retirement plan. However, there’s a 60-day grace period which allows RMDs to be rolled over into a new IRA.1
2. Roth IRA conversions during this time could result in substantial tax savings while markets are down, and tax rates are lower. Since the bill allows you to skip RMDs for 2020, you can convert assets from a traditional IRA to a Roth IRA without having to satisfy the typically required RMD.2
3. Cash contributions to qualified charities are fully deductible up to 100% of a taxpayer’s adjusted gross income (up from 60% previously). Taxpayers who don’t itemize their deductions are entitled to a “above-the-line” deduction of up to $300 for qualified charitable contributions.3

COVID-19 and Your Retirement

Could COVID-19 change our lives forever? Undoubtedly so. The viral outbreak has absolutely upended our lives. With the stock market meltdown that began on February 20, 2020 and panicked headlines dominating the news, the financial confidence of many Americans was shaken as unprecedented measures began to unfold. While some uncertainties may lie ahead, you might be wondering where does it leave you with regard to retirement planning. Here are two big questions that may be keeping you up at night:

1. Should I be concerned about the market volatility? Investing in an ever-changing environment can evoke many emotions. While stock market woes can make you anxious and wanting to sell, remember the fundamental principle that you should buy low and sell high. And now may not be the time to sell. Many opportunities may lie ahead of you. So, tune out the noise and let us do all of the work. We’ll continue monitoring the situation and will keep you apprised of any relevant developments.
2. What should I do about my 401(k)? The memes you may have seen on social media couldn’t have said it better: don’t touch your face–or your 401(k). The best move you can do now may be no move at all. If you have a well diversified portfolio, you should be able to ride out the wave. If it would lessen your worries, we’d be more than happy to revisit your investment strategy.

COVID-19 has pervaded the minds of many. If you’re retired, or nearing retirement, we understand that this could be a particularly stressful time.

What a Pandemic Could Teach Us About Our Finances

A pandemic poses a number of challenges that not only harms our health and our communities, but also our economies. As we’ve witnessed, the rapid-moving pathogen COVID-19 has brought daily lives of tens of millions of people to a grinding halt; thus, shaking the foundations of social classes from all income levels. This comes to show that anything can change in an instant. While it’s difficult to plan for everything, having a contingency plan can help mitigate the financial impact. If money is feeling a little tight right now, consider these lessons:

• Establish a budget and start making cuts. Now is the best time to reassess your spending and create a budget. Start off by calculating your expenses and income. If there’s a budget deficit, you may want to eliminate any nonessential costs. This can include gym memberships and subscriptions services. By limiting yourself to solely necessary spending, you’ll be able to save a considerable amount of money that could go towards mortgage, groceries, and savings. These cutbacks may not feel like much, but they can add up to a lot.
• Strengthen your emergency fund. An industry report reveals about only 40% of Americans could pay an unexpected $1,000 expense.1 One of the best things you can do for you and your family is to have a fallback fund to cover unexpected expenses. A rule of thumb is to amass an amount equivalent to three to six months of living expenses.
• Seek out opportunities. Losing your primary source of income can be detrimental, but there are many ways you can earn extra cash. Considering starting a side business from home whether it’s online tutoring, web development, or freelance writing. And while market swings can be frightening, they can also be healthy events. Times like this can be a great time to reevaluate your risk tolerance. We’d be more than happy to connect and reassess your portfolio for new opportunities.

These uncertain times can make it hard to keep a clear head. However, it serves as reminder to remain calm and know that we can recover from this. By being prepared and strategic in how you’re managing your finances, you’ll be able to overcome any obstacle life throws in front of you.

Financial Assistance Amid COVID-19 Outbreak

The arrival of the COVID-19 pandemic has shook the financial stability of millions of Americans. In addition to mortgage relief, many financial institutions of all sizes, including Ally Financial, Bank of America, Citi, and Fifth Third Bank, have taken proactive steps to offer assistance for credit card, auto, and small business and personal loans. While policies vary by institution and are on a case-by-case basis, they include but not limited to fee waivers, deferred payments, loan modifications, zero to low-rate loans, and more.

Click here for a running list of the banks that are offering financial aid to those affected by the pandemic. If you’re experiencing financial hardship, we encourage you to reach out to directly to find out what assistance they can provide.

As usual, we’re here by your side to provide guidance through the ever-changing world to ensure that you remain on track of your goals.

Get Mortgage Relief from the Financial Impacts of COVID-19

As the number of COVID-19 cases in the U.S. continue to rise, Americans are seeing their hours cut, jobs disappearing, and expenses adding up. While the situation remains grim and many are waiting to return to work, homeowners are struggling to keep up with their payments. On March 18, 2020, the Department of Housing and Urban Development announced the suspension of all foreclosures and evictions for two months.1 Many mortgage lenders are also offering relief in response to this crisis.

If COVID-19 has caused you to be financially strained and you’re worried about falling behind on payments, contact your mortgage servicer as soon as possible for relief options.

The biggest chunk of the average American’s budget goes to housing. Avoid dipping into your savings–a mortgage forbearance could allow homeowners to allocate the funds normally reserved for mortgage towards other necessities.

Got questions or need a second opinion on your options? Don’t hesitate to pick up phone and call us at [INSERT PHONE NUMBER]. Don’t let the upheaval caused by COVID-19 throw your financial strategy off-course. Let us assess your needs and recreate an action plan to help you get through this unprecedented time.

What the Extended Tax Deadline Means For You

Amid the COVID-19 outbreak, the Treasury Department and Internal Revenue Service (IRS) announced that the tax deadline is being extended from April 15, 2020 to July 15, 2020.1 This allows three additional months for taxpayers to file and pay their taxes, interest free and penalty free. While the extension brings a bit of good news and some relief to taxpayers, it may also not be a time sit around and wait.

Consider this–a tax refund can be the largest paycheck of the year for many with 72% of taxpayers receiving a refund close to $3,000 last year.2 Given more time to file may sound nice, but some money in your pockets during a critical time such as this can be extremely beneficial.

During social distancing and lockdowns, your tax refund can be used to:
• Purchase essentials such as groceries and medication
• Cover bills if you’re on unpaid leave of absence or recently unemployed
• Pay down any high-interest debt
• Boost your emergency fund
• Contribute to your retirement accounts

No matter the speed bumps and potholes that may arise in life, we want you to remain confident throughout your financial journey. Your refund is money that you’ve worked hard to earn. Now, let it work hard for you.

Three Smart Ways to Use Your Tax Refund

The federal tax deadline of Monday, April 15 is just around the corner, and you may be excited about the possibility of receiving a sizable refund. After filing taxes, most refunds will be issued within three weeks. If you’re receiving one this year, it’s the perfect opportunity to improve your financial situation. Data from the IRS shows the average tax refund in 2019 is $3,143.1 Whether you’ll receive less or more, this windfall could make a difference in your future. Consider these three smart uses:

1. Ramp up your emergency fund. Use your refund to build or replenish your emergency savings. You’ll achieve a better sense of financial security by having a cushion for those unexpected events, such as a job loss, illness, an accident, or a natural disaster.
2. Pay off high-interest debt. Have a credit card or loan balance that seems to never go down? By significantly lowering your debt, you’ll be left with paying less interest and having smaller payments. And soon enough, you’ll be moments closer to debt freedom.
3. Contribute to your retirement account. Investing your refund in a retirement account such as a 401(k), traditional IRA, or Roth IRA with potential tax advantages can help create a better position for you in your golden years. In addition, you might be able to deduct some of the contributions on next year’s return.

Whether you spend it or save it, be sure to use it wisely. Remember it’s not free money, it’s money that you’ve earned. Need advice or further guidance on how to best leverage your refund?