Sticking to retirement objectives in 2021 may show troublesome

For many Americans, a top solution for 2021 is to save more money, a well-known goal from previous years.

However, achieving this can be much tougher this year and may need to be done slightly differently, especially when it comes to saving for retirement.

Almost four in ten people said they were in “survival mode,” which a Fidelity survey found focuses on dealing with everyday money matters. Most Americans experienced a financial setback in 2020 – due to job loss, unexpected expenses, financial aid to family and friends, or dealing with a health emergency, the survey found.

As a result, many people immersed themselves in most of their money – their retirement accounts at work. Nearly 60% of Americans withdrew or borrowed money from an IRA or 401 (k) during the pandemic, and nearly 66% used that retirement plan to cover basic living expenses, according to a Kiplinger / Personal Capital survey of 744 people aged 40 to 74 years of age with $ 50,000 or more retirement assets.

“Lots of people saved up for decades to build this nest egg and, frankly, the survey results are amazing,” said Jay Shah, President of Personal Capital.

Top retirement plan providers have not disclosed the percentage of people who withdraw money from their accounts. According to Fidelity, the country’s largest 401 (k) provider, about 1.6 million people – or about 6% of the 401 (k) and 403 (b) Plan participants – will have a distribution-related in 2020 Coronavirus Taken From Their Accounts.

The average payout was $ 20,400. Approximately 81,000 attendees took out a loan for an average of $ 16,200 under the provisions of the CARES Act.

Focus on economic security

Angel Trinh, a 31-year-old New Yorker who works in the cybersecurity field, says her main goal this year is to focus on her own economic security. She said she is now saving as much as possible in her retirement accounts so that she will be well prepared later.

The maximum amount you can contribute to a Traditional or Roth IRA in 2021 is $ 6,000. You can invest up to $ 19,500 in a traditional or Roth 401 (k), 403 (b), or employer-sponsored plan.

If you’re 50 years or older, you can add both of the back-up fees – an additional $ 1,000 for an IRA and an additional $ 6,500 for a 401 (k).

“I have to catch up,” said Trinh. “I had student loan debt. Now that I’ve paid off all of my student loan debt, I can get the maximum out of my investments to catch up.”

She also wants to learn more about investing and have more control over her retirement funds.

Financial advisor Roger Ma, author of Work Your Money Not Your Life, said it was important to first focus on what you can control in the investment landscape – what you are invested in, how much you invest in, and where You make each of these investments. ”

Trinh’s retirement assets are primarily invested in cut-off funds – which are automatically offset from stocks to bonds as you near your retirement date. This is the standard investment option for many workers on their 401 (k) plans.

Deadline funds are “a great way to get started investing,” said Ma, certified financial planner and founder of Life Laid Out.

But then he says to try to create his own version of a target fund by investing in funds – a US stock index fund, an international stock index fund, and a US bond index fund – that are often used to create a fund.

Trihn said she thinks advice could set her on the path to her ultimate goal.

“I want to retire with a lot of money and be financially free,” she said.

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