Hi everyone. Below is a quick summary of the COVID-19 legislation that affects retirees. Before jumping into that, a quick apology. Sorry I haven’t written much lately. January and February are normally very busy months for me as I meet with clients for annual reviews. Just as that was wrapping up, the world (and markets) went haywire with the pandemic and I’m just now coming up for air.
New Rules That Affect Retirees
The coronavirus stimulus packages contain something for (almost) everyone: businesses, individuals, students and yes, retirees. I won’t bore you with a comprehensive list, but I’ll give you a quick overview of the elements that impact retirees.
Changes to Required Minimum Distribution (RMD) rules: The CARES Act allows you to suspend RMDs for 2020 from 401(k)s, 403(b)s and IRAs. If your IRA took a hit and you don’t need the money, it’s probably a good idea to skip your 2020 RMD. That will hopefully give your account time to recover from the recent downturn. If you have your RMD set to happen automatically each year, you’ll want to call your adviser or IRA custodian to stop it. If you’ve already taken it for the year, there is a provision that allows you to put it back. Certain restrictions apply, so check with your IRA custodian for details. Also keep in mind that Congress made another change to RMDs at the beginning of the year that pushed the required age from 70 ½ to 72.
Penalty waived for early retirement withdrawals: Normally, you have to pay a 10% penalty if you take a distribution from your IRA prior to age 59 ½. That penalty is waived for 2020 on amounts up to $100,000 for anyone affected by COVID-19 (e.g. sickness, job loss, reduced hours, etc.). You’ll still owe taxes on the distribution, but you can spread the taxes out over three years. And if you end up not needing some or all of the money, you can put it back into your IRA within three years and that contribution won’t count toward your annual contribution limit.
Stimulus checks: Even if you’re retired and not working, you may still be eligible for a stimulus check. The CARES act provides one-time payments of $1,200 for individuals and $2,400 for couples. The benefit begins to phase out at adjusted gross income of $75,000 for single filers and $150,000 for those married filing jointly. They phase out completely at $99,000 for singles and $198,000 for married filing jointly. Initially, people were required to file a 2018 or 2019 tax return in order to receive the benefit, but many retirees are not required to file a tax return, so the government now says it will look at SSA-1099 benefit statements. If you are receiving Social Security and are eligible for the benefit, the government will send out your stimulus check automatically in the same manner that you receive your regular benefits (likely via direct deposit).
Expanded loans from qualified plans: If you have a 401(k) or other qualified plan, you can now borrow 100% of your vested account balance, up to a maximum of $100,000. The deadline to initiate the loan is September 23, 2020. If you already have a loan outstanding, you can delay repayments for up to one year.
Delayed tax filing deadline: The due date for filing federal income tax returns (and paying any balance due) has been moved from April 15, 2020 to July 15, 2020. This extension applies automatically to all taxpayers and you don’t need to file any additional forms to qualify. The delay applies to 2019 returns as well as estimated tax payments for Q1 of 2020 that would otherwise have been due on April 15. If you’re still unable to file by July 15, you can file for a normal extension using Form 4868. Keep in mind that the regular rules still apply to that second extension (i.e. it extends the due date of your filing, but not the due date of any taxes due). Not all states extended their filing deadline, so be sure to check your state’s deadline to make sure you file on time.
Delayed mortgage payments: The CARES Act allows certain borrowers to delay their mortgage payments for up to a year. Be careful with this provision, however, because depending on who owns your mortgage (your bank or another servicer), you may be allowed to tack the payments onto the end of the loan or you may be required to pay all of your back payments in a lump sum at the end of the forbearance period. Check with your mortgage provider for details.
Medicare and COVID-19: Under earlier legislation (the Families First Coronavirus Response Act), health plans are required to cover COVID-19 testing at no cost to the patient. If you’re already on Medicare, it provides coverage as well. Medicare will cover COVID-19 testing and also covers hospitalization and treatment. In addition to these benefits, Medicare has expanded its coverage of telehealth benefits. For more information on all these things, visit https://www.medicare.gov/medicare-coronavirus.
These are definitely unprecedented times. Stay safe and touch base if you have any questions or if there’s anything I can do to help you.
How healthy are your friendships? The answer will have a huge impact on your retirement. Research shows that friends (or lack thereof) can affect your health, happiness and even your habits. Let’s look at the findings, examine some of the challenges your friendships will face as you age and discuss a few ways to make and maintain friendships during retirement.
How Friends Affect Us
According to the Mayo Clinic, friendships can affect your
health and happiness in a number of important ways:
- They provide support in tough times.
- They help you find belonging and purpose
- They reduce your stress and increase happiness
- They give self-confidence and self-worth
- They can help you through difficult times like
death, divorce, illness or job loss
- They provide accountability and positive peer
- They help reduce the risk of things like
depression, high blood pressure and unhealthy BMI.
In addition to the benefits above, friendships can help keep
your mind sharp. Several studies have found
that there is a strong connection between loneliness and cognitive
decline. For example, a 2018 study in
the Journals of Gerontology found that loneliness was associated with a 40%
increase in dementia among study participants.
In another study, researchers in the Netherlands found that people who
feel lonely are about 1.6 times more likely to get dementia.
There’s also evidence that the importance of friendships
increases as we age. Dr. William Chopik
at Michigan State University conducted a study on how our relationships affect
our health and happiness as we age. The results
showed that the benefits we get from healthy family relationships stays level
throughout life, but the value of good friendships has a greater impact on our
health and happiness as we age. According
to Dr. Chopik:
“Friendship quality often predicts health more so than the quality of other relationships.”
The Problem + The Solution
So the benefits of friends are huge, but there’s a
problem. Making and maintaining quality
friendships gets harder as you age. In
mid-life you have competing priorities like kids and work. As you age, caring for your parents often
gets added to the list. And life isn’t
static. Circumstances change and
friendships ebb and flow. Major life
events—death, divorce, job loss, moving and retirement—can derail even the best
of friendships. So if you want to enter
retirement with good friends that have a positive impact on your health,
happiness and cognitive function, you need to be intentional.
That means investing time, effort and often money into your friendships. It means being kind, likeable and trustworthy. It means listening and being transparent. It means being reliable and available. It means celebrating victories and being there when life is challenging. It means being loyal and avoiding drama. It means being proactive about spending time together. All those things have a compounding effect over time. They deepen friendships and give them a solid foundation. And as we saw earlier, those deep friendships take on added meaning as you age.
A Few Practical Applications
The primary takeaway is this: Don’t underestimate the power of friends. They can make or break your retirement. Start working on them now. If you’re looking for a good place to begin, forward this article to one or two of your friends and start a conversation. Ask how you can be a better friend. Plan an adventure or fun outing. Start a new tradition. Discuss ways to deepen your friendship. Compare retirement plans and make sure they overlap in ways that will allow you to maintain your friendship. All of this takes effort, but it’s worth it. The payoff is a healthier, happier life for both you and those you care about.
Read this quote from Jeff Bezos and then let’s apply it to retirement.
“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”
What won’t change in retirement?
Bezos was talking about business, but you can just as easily apply his idea to retirement. Most people spend decades preparing for retirement. If you’re going to do that, you want to make sure that the time, money and energy that you’re investing will get you to where you want to be and will pay dividends for years to come. So, what won’t change? What is likely to be just as true 10 or 20 years from now as it is today? Here are three ideas:
You’ll want to be healthier. I have yet to come across the retiree who doesn’t care about their health. Everyone wants to be as healthy as possible for as long as possible. I’m sure the same will be true of you. So the time and effort you spend on improving and maintaining your health will be well spent. That could mean making a long-term commitment to eating better. Or hiring a personal trainer. Or buying better quality food. Or going to your doctor for regular checkups. Or going to a physical therapist to finally treat those aches and pains. Or flossing (seriously…new research links gum disease to Alzheimer’s). Or getting that knee or hip replacement surgery that you’ve been putting off. If it’s an investment in your health, it will pay dividends for years to come.
You’ll want to be happier. That was true when you were 2. It was true when you were 20. It will still be true if you live to be 200. So think about the things that make you happy and invest in those. Here are a few suggestions based on happiness research. Invest in relationships. Learn new things. Focus on experiences rather than things. Work on something bigger than yourself. Exercise. Meditate or pray. Spend time outdoors. Help others. Get enough sleep. Forgive. Stop comparing yourself to others.
You’ll want to be more financially secure. I’m sure everyone has dreamed of winning the lottery, but that’s not what I’m talking about. Financial security simply means you’re not worrying about money at night. It means having enough to buy your freedom. Enough to control what you do with your time. Enough to do the things that you want to do. Enough to help those you care about if they need help. Enough to take care of yourself if/when your health changes. Enough to design the kind of lifestyle you want. The desire for financial security will not change, but it takes most of us a long time to get there. So be a good steward of your assets. Save diligently. Pay off debt. Invest wisely. Calculate how much you need to fund the retirement you want and make a plan that will get you there. Hire an adviser if you need help. Get your finances in order and it will pay dividends (literally) for years to come.
Step 1: Decide what won’t change.
Step 2: Invest in those things.
Step 3: Reap the rewards for years to come.
Touch base if I can help.
In January I wrote a lot about health. You can’t be unhealthy—mentally, emotionally, physically—and have a great retirement. While that’s true, it’s also true that you are fighting a losing battle.
No matter how much kale you eat or how many marathons you
run, your body is gradually breaking down.
Mine too. In science, this is
called entropy. Everything is moving
from order to disorder. You can slow the
process through your actions and decisions, but you can’t stop it. How should this affect how you live?
First, don’t let it depress you. Yes, your time is limited, but to paraphrase Seneca, you have plenty of time if you use it wisely. Second, stop waiting. Delayed gratification is overrated. Decide what you really want out of life and start taking those plans very seriously. Retirement isn’t about how many birthdays you’ve had or whether or not you punch a time clock. It’s an intentional way of living that prioritizes freedom, fulfillment, purpose and relationships. It starts today and is an incremental process of aligning your lifestyle and actions with your highest priorities.
Bottom line? Do
everything you can to get and stay healthy, but don’t stop there. Make the most of those extra years. Start today.
“We have two lives. The second begins when we realize we only have one.” – Confucius
Quick summary: Loneliness and depression are growing problems with the baby boom generation. In this article I talk about why that is, the problems that it causes and a few ideas on how to fix it.
Loneliness is the sadness you feel when there’s a gap (in
quality or quantity) between how much social interaction you have and how much
you want to have. Unfortunately, it’s a
growing problem among retirees. According
to the American Journal of Geriatric Psychiatry, loneliness affects between 25%
and 60% of all older adults. The baby boomer
generation reported the highest levels of loneliness and isolation. This is a serious issue because it not only affects
quality of life, but can also have severe health consequences. Why are retirees particularly susceptible to
loneliness (and depression) and how can you keep it from ruining your
As you age, there are a number of things that can affect the
quality and quantity of your relationships.
Death. Divorce. Leaving the workforce. Moving.
Physical changes, like arthritis, can affect your mobility and keep you
homebound. Common ailments like hearing
loss can make it harder to engage socially.
Women are especially vulnerable because they live longer and are
therefore more likely to be impacted by one or more of the previous risk
factors. What are some of the problems
that loneliness causes?
Loneliness affects more than just your happiness and quality
of life. It increases the risk of
depression, cognitive decline and dementia.
It weakens the immune system. It
increases blood pressure. In short, it
is linked to poor health and early death.
So let’s re-cap. Loneliness is
more common among older people and the side-effects are no bueno. How can you keep it from ruining your
retirement? I put several ideas below.
Work on your social
circles. A large study by Julianne
Holt-Lunstad of Brigham Young University found that those with greater social
connection had a 50% lower risk of early death.
Retirement is an amazing time, but it’s also a time where your social
network can undergo serious change. Some
of those are by choice (e.g. leaving work, relocating). Some not (e.g. death of a close friend or
spouse). Either way, you need to be very
intentional about making and maintaining relationships.
Use technology to maintain
your independence. Loss of
independence can have a huge impact on social interaction. If you can’t drive, you can’t meet a friend
for coffee. Thankfully, there’s
Uber. If you can’t hear very well, you’re
unlikely to attend social functions or join groups or organizations that
require you to interact and converse with others. Thankfully, hearing aid technology has improved
dramatically. Take advantage of it. I could give a hundred more examples. Unfortunately, some people are reluctant to
use these technologies because it’s like admitting that they’re “old.” That’s nonsense. We all grow old. We all experience health changes. Don’t let stubbornness or pride prevent you
from using technology to improve your quality of life.
Consider senior housing, an assisted living facility or CCRC. People understandably want to age in place and stay at home. It’s familiar. It gives a sense of independence. I get it. But if your physical limitations mean that your home becomes a place of isolation, maybe it would be better to move into a facility that is designed to provide social interaction, regular activities and assistance with issues that get harder as you age. People in these types of facilities report being happier and having higher levels of physical, social and emotional wellbeing. Most clients I’ve worked with over the years have viewed a move into one of these facilities as a positive, even if they were reluctant at first. In fact, I moved into one myself to see what it was like. You can read more about that here: So…I moved into an assisted living facility. Here’s how it went.
mentioned this in my article last week, but it bears repeating. Several large studies show that volunteering
can have positive effects on your health and well-being. One reason it’s so good for you is because it
provides lots of social interaction. Not
only that, but doing good deeds can reduce stress and lower cortisol levels
which can strengthen your immune and cardiovascular systems and ultimately
lengthen your life. Use some of your
extra time during retirement to volunteer.
Chances are it will make you healthier and happier.
Evaluate social media
use. Sometimes social media is a helpful
way to stay connected with your friends and supplement your in-person
interactions. Sometimes it’s a vortex of
negativity that breeds discontent and FOMO (fear of missing out). If it’s making you happier and more
connected, great! If not, don’t be afraid
delete your profiles and invest your energy elsewhere.
Join a local group related to your hobbies or interests. Like to garden? See if there’s a local gardening club. Like to golf or play pickleball? Join a league. Like to dance? There’s a group for that. Like to travel? Consider group trips through organizations like Road Scholar. As with most things, hobbies are better when you can add others into the mix for friendship and fun.
Entertain. Everyone wants and needs social interaction,
but too often they just sit at home waiting for the phone to ring. They’d jump at the chance if someone took the
initiative. You can be that
someone. As our daughter has gotten
older, we’ve invested a little money in our house so it will be a place where
her and her friends will want to hang out.
I’m guessing many of you did the same thing for your kids. There’s no rule against doing that same thing
in retirement. Be the person that has
dinner parties, back yard barbeques or movie nights. Take the initiative and you’ll likely have
plenty of people excited to participate.
Get professional help. If you’re lonely or depressed, get some
professional help. There’s no shame in
that. I’m not a doctor, but I have had
several close friends and family members who have struggled with loneliness,
anxiety or depression. In each case they
sought help (counseling and/or medication) and saw drastic improvements. For some reason, there is a stigma associated
with mental health in the U.S. No one
blinks an eye when someone seeks treatment for cancer or diabetes, but there is
reluctance to treat depression like the disease that it is. There are a number of effective
treatments. “Cheer up!” is not one of
them. If you need help, get help.
If you have any other thoughts or ideas, feel free to share
them in the comments section. Thanks for
Are you trying to take better care of yourself this year? Great! We enjoy having you around. Here are 12 simple ways to be healthier, both now and in retirement.
Forgive. Researchers have discovered a link between
forgiveness and physical health. One
study showed that people who forgive have fewer coronary problems than people
who hold grudges. Other studies show
that those who forgive have less anger, less depression, decreased anxiety and
more hope for the future. The research also
shows that forgiveness improves your mood and makes you more optimistic. Don’t let old wounds fester. Forgive and move on.
Volunteer. Several large studies show that volunteering can have positive effects on your
health and well-being. Doing good deeds
can reduce stress and lower cortisol levels which can strengthen your immune
and cardiovascular systems and ultimately lengthen your life. Use some of your extra time in retirement to
volunteer. Chances are it will make you
healthier and happier.
Find purpose and meaning. Studies show that when you feel like your life has purpose and meaning, you will experience less stress (and the negative health effects it produces), you’ll be better able to cope with challenges and you’ll be more inclined to take better care of yourself. Studies also show that having purpose makes people more likely to be physically active and more likely to use preventative health services like getting a cholesterol check or prostate exam. Looking for ways to find purpose and meaning? Read this: 15 Practical ways to live a purposeful life.
Get rid of belly fat. A recent study published in the British
Journal of Nutrition showed a strong correlation between belly fat and
cognitive abilities as you age. Those
with higher levels of belly fat performed worse on cognitive tests and they
were also more likely to develop diabetes or have a heart attack.
Eat less. Maybe you’ve heard the expression, “You can’t
outrun your fork.” If you’re trying to
lose the belly fat mentioned above, focus on how much you eat rather than just
exercise. You need to burn about 3,500
calories to lose a pound. Most people
could trim 500 calories per day if they shrunk their portion size or cut back
on snacking. That would result in a
pound per week of weight loss. To burn
the same calories running, you’d need to run about 5 miles per day or 35 miles
per week. Exercise is good, but most of
us aren’t running an ultra-marathon every week, so watch the Ben and Jerry’s
Retire sooner rather
than later. According to research
done by the National Bureau of Economic Research, retiring can improve your
overall happiness and health. The
research found that life satisfaction improves immediately for retirees and
their health improves gradually over a period of years.
Retire later rather
than sooner. There are other studies
that show that retiring later (after 65) may extend your life. I suspect this
has to do with the quality of your pre-retirement life. If you have a fulfilling career, staying in
the workforce can help you stay socially and mentally engaged and reduce the
risk of certain diseases. If you hate
your job and have plenty of friends outside of work, retiring sooner (as
mentioned in #6) might provide more benefits.
carries a number of benefits. It reduces
stress, anxiety and blood pressure. It
improves self-awareness and can help you sleep better. It helps you live more in the present. It can improve emotional health and reduce
age related memory loss. There are
several apps that can help you with meditation, including Calm and Headspace.
Don’t smoke. This one pretty much goes without saying.
Get enough sleep. The research on sleep has gotten pretty
compelling. Most adults need between 7
and 9 hours of sleep per night. Getting
enough sleep can strengthen your immune system, help you maintain a healthy
weight and help reduce your risk of serious health problems like diabetes and
heart disease. It can also improve your
mood and help you to get along well with others, which will help with # 11.
Work on your relationships. Retirement is a risky time for
relationships. Death can take a spouse
or close friend. Leaving work might
alter key relationships or social interaction. Friends might retire and move away. Those are all bad, because loneliness is
linked to poor health and early death.
In fact, loneliness has the same impact on mortality as smoking about 15
cigarettes per day. The takeaway? Invest in friendships. Invest in your family. Work on your relationship with your
spouse. Being lonely and isolated can
Exercise. We all know that exercise is important, but
recent research shows just how important it is to retirees. Not only does regular exercise reduce your
risk of heart disease, diabetes and stroke, but a recent study by Cardiff
University showed that exercise was the single biggest influence on whether or
not study participants developed dementia.
If you want to maintain your faculties and have a healthy, active
retirement, then get regular exercise.