The COVID-19 pandemic has likely affected most retirement plan balances and people’s ability to save monthly. But the hardest hit were retirees or those nearing retirement.
Boomers at Risk
Unfortunately, retirees and older workers have little time to recover portfolio losses. Some nearing retirement may have experienced permanent job loss, forcing them to tap retirement savings, claim Social Security benefits or even retire earlier than planned leading to permanently reduced income.
Generally, most people should try to avoid accessing retirement funds early. However, if you must tap your retirement accounts due to the pandemic, the CARES Act included several tax breaks that may be helpful:
- The CARES Act waives the usual 10% early withdrawal penalty on coronavirus-related distributions taken from IRAs and 401(k)s before age 59 1/2 in 2020.
- Coronavirus-related distribution income can be spread out over three tax years.
- If your 401(k) plan allows for employee loans, the CARES Act doubled the amount you may borrow from $50,000 to $100,000 in 2020.
Know that these tax breaks will expire December 31, 2020, unless Congress acts to extend them.
What’s Your Next Move?
As we enter into the last quarter of the year, remember that investment volatility is a fact of life. When in an unpredictable market environment, it is important to cling to well-known basic that can help you to stay the course with your investments.
Remember that markets have historically recovered and reached new highs. You do not want to miss out on the upswing, so maintain an asset mix in your portfolio that’s appropriate for your needs, goals, time horizon, and risk tolerance. This may require that you assess your situation and rebalance your portfolio, because market fluctuations can throw the mix of investments out of line with your objectives.
During stressful times like these it is important to reign in emotions so as to prevent making bad decisions. Work closely with your tax and financial professionals to help focus your savings and tax strategies toward a financially secure future.
You can get the answers you need, and more, in one place you already know.
Available exclusively for members like you and located at Crane Credit Union, the Crane Investment Services Program offers retirement planning and investment services, along with the advice and information you need to make well informed decisions regarding your financial future.
Whether you’re looking for help with just one specific financial issue today or a reliable source to create a life-long financial plan that addresses all your needs, Crane Investment Services can help you.
Get started on your financial plan. Call 800-692-3274 for your no cost no obligation appointment today.
Crane Investment Services advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), Member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Broker Services, Inc., is a registered broker/dealer in all fifty States of the United States of America.