Podcasts Business Retirement Starts Today Economic Effects of the Coronavirus, Ep #141

Economic Effects of the Coronavirus, Ep #141

Published: May 25, 2020, 8 a.m.

Thanks for participating in the office hours that we\u2019ve held for the past several weeks. Due to that question and answer period, we have exhausted all of our listener questions. But don\u2019t worry we have some interesting articles to discuss on today\u2019s episode. Listen in to learn more about the CARES Act, the lack of inflation, market positions from the big, and why so many people plan to return to work after being laid off.\xa0

Outline of This Episode
  • [2:42] Financial planning opportunities within the CARES Act
  • [5:02] Taking a coronavirus distribution
  • [8:10] What\u2019s up with inflation?
  • [10:55] The outsized position of FAANG stocks
  • [13:22] 80% of workers think they will return to their previous jobs
Financial planning opportunities within the CARES Act

The CARES Act was recently passed to provide more options to those affected by the COVID situation. This landmark legislation presents savvy with a few financial planning opportunities. The CARES Act has allowed for money saved in employer-sponsored retirement plans to become more readily available. Up to $100,000 can be moved to a less restrictive plan. Another opportunity is if you have already taken your yearly RMD. If you have done so, you have the opportunity to return the money to the account and let it keep growing tax-deferred.\xa0

Be careful when taking a coronavirus distribution

One more benefit from the CARES Act is that if you are under 59 \xbd and you take income from a distribution over 3 years without the 10% IRS penalty. This was written into the law to help people economically that have been affected by Coronavirus in some way. If you feel that you qualify to take money out of your IRA it is important to make sure that you only take the amount that you need so that you don\u2019t end up with a hefty tax bill at the end of the year.\xa0

Where\u2019s the inflation?

When the government pumps trillions of dollars into the economy all of the economic textbooks say that there should be inflation. But nothing much is happening. Travel and apparel fell 0.4%, gas dropped 20%, and food costs went up 2.6%. While these numbers are interesting, what do they mean for the average investor? We can learn a lesson from this. Every time we think the market is going to zig, it zags. Remember this when you try to insulate your portfolio from a specific type of risk. There is always a different risk that you weren\u2019t anticipating. The market will always throw you a curveball. Listen in to hear what you can plan for all kinds of risks in retirement.\xa0

80% of laid-off workers believe they will return to their old jobs soon

As the country slowly begins to return to normal after the quarantine over the past couple of months many laid-off workers are optimistic. I find myself sharing their optimistic, albeit cautiously. Typically fewer than half of laid-off workers expect to return to their previous jobs but this time there is hope that things could be different. Only time will tell if this will be the case.\xa0

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