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Here are seven steps you can take to begin the process of preparation for mediation

The epidemic was a gut for millions of retirees. In March 2020, there was a sharp decline in the stock market, and then millions of people lost their jobs, health insurance, the ability to finance their savings. It’s a huge financial disaster for many Americans և they may not recover for years.

Oni Roths, a retired business owner in the San Francisco Maritime area, had an option 12 years ago, having what he called a “major disaster” with his finances during a difficult divorce. Although he reasonably coped with the epidemic, his earlier economic shocks caused him to owe a limited debt, he said. He needed help.

Ruth, who co-owned a design firm with her husband, was linked to Clary Knollet, a certified financial planner-certified divorce financial analyst. “Clary estimated my financial needs and expenses to project how much money I needed to maintain a stable, healthy lifestyle,” said Roths, 78. “All this was a new area for me.”

“Take care of yourself, if you do not already have a good support system, develop it,” says Oni Rats. (En Enna Schoenfeld / The New York Times)

Now, in the face of an epidemic, such challenges are faced by people who could otherwise save for retirement. Although it is often difficult to repay retirement savings, 27% of Americans surveyed last year by FinancialBuzz said they had cut or stopped because of COVID-19.

The epidemic also affects 21% of adults who have not started saving for retirement, according to the study, including 45% of Generation Z and 20% of millennials. In addition, 10% of employees reported withdrawing from their 401 (k) last year, up from 6% in 2019, according to a survey by Alight Solutions.

Some of the companies most affected by the epidemic have reduced their 401 (k) corresponding investments. More than 80 people with more than 100 employees have stopped meeting, according to the Boston College Pension Research Center. Only 26 of them had recovered their investments by April.

However, the picture of the epidemic recession is unclear. According to the center, most of the white-collar professionals seem to have had little impact on the retirement front. Those who spent less on work-related expenses, such as food and travel, were often able to save more. Social security recipients continued to receive their vouchers.

While the economy can sustainably grow for most workers, it will still leave millions. Nearly half of all workers did not have a retirement plan at work even before the epidemic, said Anki Chen, assistant director of savings research at the center.

They do not say that the unequal impact of the epidemic increases the gaps in the US pension system. Although “401 (k) investments and balances seem relatively invulnerable,” unemployment has not disproportionately harmed older workers, while COVID weaknesses remain. finding new jobs. “

Despite the barriers to savings, there is much you can do to build your financial future.

First, look at your overall expenses. “Even if you do not experience a painful financial transition, the principles of recovery and planning are universal,” said Nolet, a certified financial planner. One of the first questions he asks customers is, “How much do you spend per year?” While customers do not take the time to document their expenses, he said they do not really know the number. “They are like deer in the spotlight when they realize they are spending a lot more than they thought.”

“Pending costs have the biggest impact; they’s the investment you have the most control over,” Nolet added, adding that “it’s not surprising to create a budget and stick to it.” “Once you know where you are spending money, you can choose where to cut,” he said. “Psychologically we have to work through desires and needs.”

There are other important issues of his expenses. Can you afford your own home? What interest rates do you have on your credit card payments?

If you owe credit card debt at double-digit interest rates, pay it off first, advises Lori Price և, a Connecticut-certified financial planner in Florida.

Focus on health insurance. When many people lose their jobs, they lose their և family health insurance coverage. Unemployed people can often continue their insurance under the COBRA program, Price says, but it can be very expensive.

“One client, a good friend, who will turn 60 in a few months, was fired for a $ 1,700-a-month health insurance bill,” he said. “I told her to go through all the discretionary expenses. What expenses could he have postponed until he was 65, when Medicare started to reduce high premiums but not eliminate them? For those who do not have a lot of savings, this is the first step. “

Another option is to apply for coverage through the Affordable Care Act, which offers a range of programs, including for the unemployed.

Invest in augmentation! If you are 50 years old or older, the IRS gives you some savings. You can save up to և $ 6,500 a year on your defined investment plans (which include 401 (k) s, 403 (b) s և 457s). If you have a REGULAR (Comprehensive Employee Savings Incentive Plan) Retirement Account or SIMPL 401 (h), the annual fee is $ 3,000; this is $ 1000 for a Roth IRA.

Automate your savings. If you work աշխատում offer a 401 (k) salary with automatic deduction, you can simply increase your investment. Do you want to save even more? Many programs allow you to increase your 401 (k) savings when you receive an increase. For example, if you are 50 years of age or older, save up to $ 26,000 a year. That’s a $ 19,500 plus $ 6,500 investment. Also, make the appropriate contribution from your employer if it is offered. This is the low-hanging fruit of retirement savings, which most financial planners recommend, again, if you have access to it.

Adjust your portfolio. Simply entering more money into your bank account will not help you catch much at all. After all, the S&P 500 index is a shocking amount. More than 40% this year. Yield in the money market is terrible. The highest interest rate in the country was 0.60%, Bankrate.com reports. The best way to achieve your goals is to invest in mutual funds without any encumbrances, preferably with an annual cost ratio of less than 0.30%.

Most mutual fund companies offer dividend-fund mutual funds. Avoid the trap of thinking that money is safe in the bank. If it does not stimulate inflation, which is currently below 3% per annum, then you lose purchasing power. “Do not keep too much money in your bank account,” Price warned. “They pay very little to keep you there.”

Retire later. If you can, one simple strategy is to retire after the “normal” age of Social Security benefits, which for most Americans is 66 years. This will give you more time to save. Social Security will pay you even more each month if you wait until և 70 to receive benefits. The Deferred Pension Loan will increase your retirement payments by 8% per annum each year as you wait to receive benefits for those born later in 1943 from age 66 to age 70.

Make your own plan. Small business owners or those who are self-employed can make their own plans, ranging from a simplified employee retirement IRA of up to 401 (k) s. The price suggests that people over the age of 50 consider Roth 401 (k) if your employer offers it. Although investments are taxed, deductions are not. “You are taxed not for profit, but for money,” he said. “If you can not pay back taxes in the future, it is a good idea.”

Whether you are still recovering from an epidemic or have not been seriously affected, these principles of financial planning should still be your foundation. That way, you can not only be prepared for the next financial crisis, but you can also build a solid retirement base that is strong during the normal years.

Rats said he was glad he had consulted. But not everyone can. His advice to anyone, regardless of the situation. “Take care of yourself, if you do not already have a good support system, develop it.”


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