Tips for managing your retirement money amid the pandemic
(FOX 2) - The pandemic has put a hit on finances for many Americans for a number of reasons.
Mark Williams from Brokers International works with thousands of financial professionals across the country. He has advice for those who were close to retirement before the pandemic hit.
"So retirement. A couple of rules specifically right now with respect to COVID and possibly being out of work: you want to make sure, number one, you always continue to save. So whether that’s through your own savings account or your qualified accounts or your 401(k) or your IRA, make sure you’re always paying yourself first. Don’t get concerned with the really short-term fluctuations. We're hearing a lot about the stock market moving up and down, continue your course especially if you’re close to retirement. Continue doing what you’re doing, don't worry about short-term fluctuations, make sure you’re always paying yourself first," he said.
So, how do you pay yourself first?
"So, treat your own savings like a bill. So you have your mortgage payment or your rent, you have your electricity bill and then you tell yourself that my bill, let’s call it $50 or $75 or $100 a month, I’m going to pay myself and my savings account just like I would pay my electric bill or my power bill. That way you’re always making sure you’re paying yourself first."
What advice do you have for people looking at taking money from a 401 (k)?
"So if you are planning on taking money from a qualified account like your 40(k), there is something you should think about. First, make sure that your plan allows you to take a big loan or a withdrawal. Most of them do, but every plan is different and every employer's plan is different. Number one, make sure you have the availability.
"There are two or three types of withdrawals you can make. One is possibly a hardship withdrawal, so if you are out of work there are rules that allow you to take money out with very favorable consequences. You can take a loan from your 401(k) if you want to decide to pay that back at some point in time or you can take an actual withdrawal. The concerns there are penalties and taxes. Because remember, your qualified plans have not been taxed yet; they grow tax deferred.
"So those are the three most important considerations: make sure you can take it, make sure you know how much you can take and then decide which type of withdrawal you would take from that money."