This is the most memorable moment of the year. My accountant sent my husband and me a note yesterday asking how much we intend to contribute to the retirement account for 2020. Obviously, that makes a difference in the current tax bill. Waiting for our processing.
I signed. Our contributions are fully deductible because neither of us has an employer-provided plan. But last year was a tough year for freelancers like us, and our budgets have been tight. My speaking business stalled in March. All of my pre-booked speeches have been canceled.
The search for cash to accumulate right now can and will be done, but it took us to pause to find ways to mine our savings.
Maybe I’m sharing too much, but at our age it makes us stop and think, should we really contribute to a retirement account? My husband is approaching the point where he will start making the minimum deliveries needed by law stay at 72 from your tax deferred retirement account. (If you reach 70 ½ years old by 2020 or above, you must get your first RMD by April 1 of the year after you reach 72 years of age.)
Do tax benefits guarantee contributions now? Is it a safeguard to keep our money growing and double tax free until withdrawn? Is it our safety net to finance lives that extend to more than 100 people?
The answers to these questions for us are, It’s correct.
“Since SAFETY Act Said Sarah Heegaard Rush, Certified Financial Planner with Lincoln Financial Advisors. “And life expectancy has increased, so you should plan on retiring at age 95,” she said.
We’re not alone in grappling with funding retirement plans.
Plague’s retreat to retirement accounts
According to the new Fidelity Investments report “Retirement planning in 2021 Learn“More than eight out of 10 Americans say events in the past year have affected their retirement plans, with a third (34% of boomers) estimated to take 2-3 years to return to their retirement.” On the right track, due to factors such as job loss or retirement withdrawal.
However, 82% are confident that they will achieve their retirement goals. In particular, men showed more assurance: 55% said they were ‘very confident’ compared to just 39% of women. While many people are disappointed (30%) or angry (11%), nearly half (45%) hope or resolve they will get back on track.
Rita Assaf, vice president of Fidelity, College Leadership and Retirement, said: “People entering their 50s are now realizing that retirement is getting closer, but there is still a lot of life in there. front. “This is where saving for retirement becomes even more important, because people are starting to make decisions about how and when they want to retire. To achieve those goals – and to make sure they can take care of the undesirable things, such as what’s needed for health care – is more important than making sure you have enough savings. “
Now this is where Fidelity’s new findings really annoy me and remind me once again that there must be a frantic appeal in this country to strengthen financial education for all ages.
When asked how much someone should save for retirement, only 25% of respondents correctly indicate that financial experts recommend 10-12 times more than your final year working income. before you reach retirement age. Half of the respondents said that this number would be only 5 times or less, according to the report.
Nearly a third (28%) say financial professionals will recommend a 10 to 15% withdrawal rate in retirement savings per year. Most financial planners propose a rate of 4 to 6 percent annually.
Most of the respondents underestimated the out-of-pocket healthcare cost for a married couple in retirement, with 37% guessing in the $ 50,000-100,000 range. In fact, for a couple retiring at age 65, the actual average cost during their retirement is three times higher, at $ 295,0003, according to Fidelity data.
Regarding the impact of divorce on Social Security: 63% of respondents think that ex-spouse is likely to be reduced monthly benefits, in fact, one’s Social Security benefits are not reduced. if a former spouse asks for some of their Social Security benefits. But the claim rules are complex.
Why are some women at risk of retirement
Finally, now that I’ve gotten your attention to my retirement savings, I won’t be allowed to jump onto my podium. women and financial security in the future.
For women 55 to 64 years old, the divorce rate has tripled since 1990; for women 65 and older, it has increased sixfold. Enough said. The widow and the picture were bleak. Women often experience a financial impact of losing a spouse in both cases, and it often drastically impacts their future financial security in a cruel way.
Actually, 2018 women included 74% of single households aged 80 and over. While the gap in life expectancy between men and women is widening, we can expect that in the next two decades, there will still be more women than men over the age of 80 living alone.
My go-to specialist for women and money affairs is Cindy Hounsell, president of the Washington, DC-based Women’s Safe Retirement Institute (WISER) non-profit organization. She recently wrote a blog for the Social Security Administration website that is worth reading; Three tips for women’s retirement planning.
Key Takeaway: “Your Social Security benefits will only provide a portion of your prerequisite income,” writes Hounsell. “That means you’ll have to save more to get enough income for the lifestyle you want when you retire. Saving needs to be an active part of your plan to take care of your own and your family’s financial future ”.
And the last two tips:
Fidelity’s Assaf said: “One way people in their 50s can keep pace is by allowing“ catch-up ”contributions in the IRA, 401 (k) and HSA (over 55 years old).
If you are 50 or older, you can make an additional $ 6,500 a year in “catch-up” contributions on any employee’s 401 (k) contributions you make. (The IRS extended the 2020 federal personal income tax filing and filing deadline and IRA contributions from April 17 to May 17).
“Taking advantage of these contributions can bring a significant amount of savings into your retirement,” she advises.
Second, if you are an independent worker like my husband and I, and don’t plan to retire at work, consider a Traditional IRA, SEP-IRA or Roth IRA and put some money on your own. Turn regular monthly deposits into a retirement savings account. Then, when your accountant calls about your annual contribution, you’ll put those amounts aside. Easy as pie.
Kerry Hannon is an expert and strategist in employment and employment, entrepreneurship, personal finance and retirement. Kerry is the author of more than a dozen books, included The Great Pajama Job: The complete guide to working from home, Never Too Old To Get Rich: A Guide to Starting a Mid-Life Business, Great job for everyone 50 and up, and Money confidence. Follow her on Twitter @kerryhannon.