GIG Tips: Planning for the New Normal

GIG Tips: Planning for the New Normal

Questions to Ask Yourself During Times of Uncertainty

Uncertainty is a given at some point in our lives, especially when it comes to our finances. There may be times when our income is steady and consistent and times when we are unsure of our incoming funds. While we are all trying to weather the storm, we can also try to prepare for what the new normal may look like once we are on the other side. Uncertain times and challenges are best met with financial resilience.

The following checklist of questions and tips—while not meant to be tax or financial recommendations—can help you start thinking about planning opportunities as you position yourself for the new terrain ahead.

FINANCIAL

Are any of your accounts subject to a Required Minimum Distribution (RMD) in 2020?
[   ] YES            [   ] NO

RMDs for 2020 have been waived. Consider whether you want to defer them. If you've already taken yours, you can recontribute the amount as long as it's done by August 31, 2020.

Do you need cash from your retirement accounts?
[   ] YES            [   ] NO

If you have been impacted by COVID-19, you can pull up to $100,000 from retirement accounts, exempt from the usual 10% penalty and mandatory withholding. You have 3 years to pay it back. You also have the option to take the lesser of a loan up to $100,000 or 100% of the vested balance.

Do you have diverse sources of income?
[   ] YES            [   ] NO

While many rely on one main source of income (i.e., their occupation), diversification can prove to be beneficial. Finding new ways to make money, or as we like to say, have multiple streams of income, can be beneficial and can help you to diversify your income. Examples include investing, identifying new ways to make money online, owning rental properties and/or exploring side businesses.

Do you have extra cash?
[   ] YES            [   ] NO

If yes, consider investing or contributing to a Traditional IRA, Roth IRA, or Health Savings Account.

Have you considered a Roth Conversion?
[   ] YES            [   ] NO

Account values have declined, tax rates are historically low, and income will likely be lower this year, all of which make 2020 an ideal time to explore converting Traditional IRA’s into Roth IRAs.

 

LONG-TERM PLANNING

Do you have a Power of Attorney and an Advanced Healthcare Directive in place?
[   ] YES            [   ] NO

It is important to ensure that your family, financial institutions, and medical providers know who you have given decision-making authority to on your behalf should the need arise.

Do you have provisions in place to protect yourself and your assets?
[   ] YES            [   ] NO

Re-evaluate your insurance coverage and update your will and/or trust, if necessary.

Have you sat down with your family and/or other trusted professionals to discuss how you have done your financial planning?
[   ] YES            [   ] NO

Doing so provides a roadmap or instructions that your family members and/or trusted people can follow.

Does your post-retirement or third-act plan account for unforeseen circumstances?
[   ] YES            [   ] NO

Stress test your plan and make sure it simulates worst-case scenarios, such as long-term care needs or significant medical expenses


In the wake of these uncertain times, many of us have had no choice but to pause, while others are hard-pressed to find a single moment to juggle the multiple responsibilities one may have. We hope that these questions will encourage you to reflect, identify, and take the necessary actions to provide for a financially resilient future.

 

Photo by Tachina Lee on Unsplash