Almost overnight, we’ve gone from heading out each day to do all the things we enjoy to staying home and hoping the grandkids will FaceTime. And the changes don’t stop at our social lives. There's a lot that’s impacting our finances, too, between trying to generate income in down markets to trying to understand what the stimulus package passed by the government in late March means for us all.
To help you start to make sense of the changes, we’ve outlined key ways the coronavirus is impacting finances for retirees.
- YOU DON’T HAVE TO TAKE YOUR 2020 RMD
If you’re subject to a required minimum distribution that's not part of a defined benefit plan, you’re not being forced to take RMDs in 2020. That means you won’t be forced to sell investments at a time when the market has sold off substantially. If you don’t need to take money from your investments to generate income, this may be an option for you to consider.
- YOU MIGHT HAVE MONEY COMING YOUR WAY
The big headline from the record $2 trillion economic stimulus package passed in late March was that checks (well, mostly direct deposits) would be sent to most of us. Basically, these payments start at $1,200 for every adult, but they are reduced if the adjusted gross income in your most recent tax filing (for tax year 2019, or 2018 if you haven’t filed yet this year) is over a certain threshold.
- YOU DON’T HAVE TO PAY YOUR TAXES IN APRIL
To be clear, you will have to pay your taxes. But the federal government has extended the April 15th deadline for filing your federal taxes until July 15th. If you’re expecting a refund this year, it’s probably a good idea to just go ahead and file now so you can get your money. But if you owe taxes and you’d like to wait to file, the government is cool with that — at least until July 15th. Here’s what you should know about the tax deadline extension.
- YOU MAY BE WONDERING ABOUT GENERATING INCOME RIGHT NOW
Retirement income plans typically lean on a mix of guaranteed income as well as investments for growth. Right now, nearly all market-based investments have lost value, so this is a time to lean on income sources that aren’t tied to the market. This could include income from Social Security, pensions and annuities, or tapping a cash reserve from a savings account or cash value life insurance. Here are a few other things you may want to consider about generating income right now.
If you have questions specific to your situation, your financial advisor can help you weigh your options.
- THE SCAMMERS HAVE SWARMED IN
Amid the heartwarming stories of neighbors helping each other out during a crisis there will always be a few bad apples. Scammers are phishing, meaning they’re sending emails that look real but are designed to get you to click on a link that will install malicious software on your computer. Read more about the scams that have already popped up here.
- THERE’S A LIGHT AT THE END OF THE TUNNEL
While much seems uncertain and maybe even a little scary right now, this kind of economic uncertainty isn’t new. In 2008, the future of our financial system was in question. In 2001, terrorism was a huge unknown. We got through uncertainty in the past. We have every reason to believe we will get through this time and come out stronger. Through 160 years, Northwestern Mutual has stood strong through wars, the Great Depression and even a pandemic flu. In this recent perspective, Northwestern Mutual Chairman, President and CEO John Schlifske says he couldn’t be any more confident about the future for Northwestern Mutual and the country as a whole.