The COVID pandemic shows that retirement funds can be extremely beneficial during difficult times. You can go ahead and plan your retirement with banks like columbia bank Marlboro to get the best out of your retirement years.
During this time, many people have begun using their retirement savings as emergency funds. The expenses during the pandemic shot up without any regular income to replace it. However, this kind of use also makes it difficult for people to believe that they can now retire comfortably.
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Warning against using retirement funds early
Financial advisors always suggest that it is better not to use your retirement funds during working years. This is because of two reasons. First, it reduces the total amount of savings that you have. Second, withdrawing retirement funds early can attract tax penalties.
Besides, the COVID pandemic brought significant changes to these concerns.
The CARES Act 2020
In March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act announced a $2 trillion package. This provides families and businesses impacted by the virus with financial support. This Act suspended the tax penalty that early withdrawal from retirement funds may incur.
It also increased the number of funds people can borrow from any retirement vehicles that have taxes attached to them.
Millennials and retirement funds
The downside to this has been that millennials have also been using their retirement funds for the emergency. This makes them lose any compounding growth that benefits a retirement fund created for the long-term.
Experts suggest that millennials can make up for this. They can do this by increasing how much you save by 1% in the coming year. The idea is not to wait too long to bridge the gap.
A retirement fund has been extremely beneficial in helping people of all ages manage their finances during the pandemic. It is now time for millennials to save better to ensure a secure future once they retire.Read More →