The Informed Investor
What You Need To Know For Retirement Planning During COVID
January 12, 2021
You’d be hard-pressed to find an area of our lives that COVID-19 hasn’t impacted, and retirement planning is no exception. We watch the markets with bated breath as stocks plummet with new waves of infections and soar with news of successful vaccines. trials. It’s enough to make even the most confident investor feel on edge, but our team of investment advisors is here to help you make the right decisions to ensure that you’re able to retire comfortably. Here are some important points to keep in mind.
1. Reduce the Impact of Sequence-of-Returns Risk
When you’re retired and there is a downturn in the market, understanding sequence-of-returns risk is crucial. Simply put, sequence-of-returns risk refers to the risk of having to withdraw funds during a time when your portfolio is losing value, as often happens in a down market. Having to sell more shares to get the cash you need leaves you with fewer total shares to compound later.
We’ll help you devise a prudent strategy to protect your portfolio’s value by proposing withdrawals from more stable assets until the market improves. We will make recommendations on what to withdraw first, and subsequently. When you’re faced with the need to withdraw other investments, our team can assist you in making the right decisions.
2. Increase Your Retirement Contributions
If you are in a position where you can increase your retirement contributions, it would be wise to do so. Contribution limits for 401(k)s have been increased by the IRS to $19,500 in 2021, with $6,500 in catch-up contributions permitted for investors over the age of 50. If you have an IRA, you can contribute $6,000, with an additional $1,000 in catch-up contributions for anyone 50 or older.
The CARES Act has provided waivers on required minimum distributions this year, so if you’re already retired, you can keep your investments in the market for a longer period of time, which has the potential to increase their value. This is critical, as it allows you to avoid withdrawing funds during a down market and allows your funds to continue to grow in an upmarket.
3. Meet With Your Estate Planner
If you’re of retirement age, you’re also at higher risk from COVID-19, which means it’s a good time to meet with your estate planner and ensure that your will is up to date. One of our specialties at ICC is helping our clients transfer their wealth to the next generation and create a lasting legacy. We can work with your estate planning attorney to develop a strategy that plans for a smooth transfer of wealth according to your wishes and maximizes the impact of your wealth.
4. Take Advantage of Virtual Financial Planning Services
We offer all of our clients quarterly meetings to discuss their needs, their portfolios, and the economic outlook. The current environment makes such meetings more important than ever, but the need for social distancing also makes them difficult. ICC is pleased to offer virtual meetings and other online financial planning services for your safety and convenience. Stay current with the latest coronavirus developments and their impact on the market by bookmarking the COVID-19 resources page on our website.
Learn More from ICC’s Experienced Retirement Planners in Las Vegas
Whether you’re already retired or you’re still working to build your nest egg, we understand that the pandemic has created a great deal of uncertainty for many of our clients. You can feel confident knowing that ICC is hard at work researching market conditions and translating that knowledge into strategies that benefit you. If you have $1,000,000 or more in investable assets and would like to learn more about our retirement planning services, contact us today at 702-871-8510.
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