Is coronavirus forcing your clients to retire early? Here are some options
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Coronavirus forcing your clients to retire early? Here are some options
Seniors have a few options in case they feel that the coronavirus crisis will force them to retire early, according to this article in Fox Business. For example, long-term savers who don't have enough set aside to retire may consider going back to work after the pandemic, even on a part-time basis, according to the article. They will also need to evaluate their entire financial situation including their retirement resources and make the necessary adjustments. Pre-retirees may also include filing for Social Security in their retirement strategy, but only as a "knee-jerk reaction," an expert says.
How to lower your clients’ retirement risk at a turbulent time
Clients who want to minimize the risk in their retirement portfolio will be better off holding investments that do not represent their human-capital profile or risk characteristics, which are tied to the industry or sector they are currently employed, says Dr. Moshe Milevsky, a retirement expert, in this article in Morningstar. Investors also need to strike a balance between the so-called time diversification and their human capital to reduce the risk in their portfolio, he says, adding that the complexities of post-career life should prompt them to change their view of retirement. "It doesn't really capture a stage of life anymore."
What to do if a 401(k) match is cut
Working clients may need to make a few financial moves in the event their employer stops giving a 401(k) match as a cost-cutting measure amid the pandemic, according to this article in Yahoo Finance. For starters, they should consider their immediate needs first and start funding an IRA. Those who have extra money to save can replace the employer match by boosting their 401(k) contributions, as this strategy will enable them to reduce their taxable income and tax bill.
How can clients save for retirement while on unemployment?
The temporary supplement to unemployment benefits under the CARES Act can help clients to continue saving for retirement even after losing their jobs because of the pandemic, according to this article in Motley Fool. The money will allow them to cover their basic expenses and save for the coming weeks until the situation stabilizes. They can now sock away the unspent savings in a traditional IRA and get an upfront tax deduction or use it to fund a Roth IRA, which offers tax- and penalty-free distributions in the future.
Here are options for easing Medicare costs if your clients’ income has dropped
Retirement savers have a few options to lower their Medicare premiums in case their income has shrunk because of the coronavirus crisis, according to this article in CNBC. For example, clients may ask Social Security to reconsider the monthly surcharges for Medicare Parts B and D through income-related monthly adjustment amounts on the basis of their reduced income. Another option is to sign up for a Medicare Savings Program or seek help from their state health insurance assistance program.