Retirement planning

An early look at the impact from the economic shutdown was not as bad as feared, while industry insiders see opportunities for advisers and sponsors to talk up the value of retirement and emergency savings.

Americans’ retirement savings are increasingly threatened by disabilities that temporarily keep employees out of work by turning to hardship withdrawals from retirement plans.

The lack of seamless plan-to-plan asset portability prevents participants from easily moving and consolidating their 401(k) savings, leaving them open to the temptation to prematurely cash out their 401(k) accounts from prior employers’ plans.

Many employees are not in a financial position to deal with an emergency medical crisis like the current pandemic and it’s hurting their retirement.

The majority of U.S. workers do not have enough savings to help them in the event of a medical emergency and often turn to their retirement funds for help.

A retirement expert advises employers on helping workers save for the future during this pandemic.

The CARES Act waiver of penalties for premature 401(k) withdrawals may hurt the very American workers and families the Act is supposed to help.

Gauging any possible changes to their health insurance coverage is just one consideration they must address before they retire.

For starters, they can use the windfall to pay off debt, shore up their HSAs and build a cash reserve.

For one, clients will owe taxes still on the distributions, unless they recontribute the money into the account within three years.

Older clients are advised to take extra steps to protect their finances as the current crisis may leave them prone to making poor financial decisions.

Clients are advised to minimize spending and tap possible sources of cash and credit, including their tax refund.

Plan sponsors should realize that now is the time to act and acknowledge that participants, many of whom are unknowingly in heavy equity allocations, will jump out as we hit more realistic volatility cycles.

Clients are advised to keep some of their savings in cash and focus on their long-term prospects.

“It's really important for employees to know where they’re at with investments, and that employers educate them so that they don't make rash decisions,” says Tara Mashack-Behney, president of retirement plan consulting firm Conrad Siegel.

“Find ways to generate income,” says one financial planner.

While some retirees have seen a substantial increase in spending, many others are enjoying financial freedom.

Industry insiders see momentum building for more retirement legislation that could upend the benefits world.

Aside from refinancing, retirees are advised to consider downsizing their homes to reduce overall spending.

With hardworking African-American and Hispanic workers far more likely to cash out than other participants, our nation has a serious retirement-saving crisis on its hands.