With cases of COVID- 19 totaling more than 5,000,000 around the world, the entire global economy has been devastated by this horrific disease. According to the International Monetary Fund, real global GDP is expected to wither by 3% in 2020, which would surpass the economic contraction caused by the global financial crisis between mid-2007 to 2009. Regional growth projections for 2020 range from positive 1.5% in South Asia to negative 7.3% in Western Europe. Unfortunately, economic momentum in Western Europe was already deteriorating heading into this year as the trade war of 2019 weighed heavily on the region’s exports. Moreover, the past decade has been tenuous for the European Union (EU) as it has dealt with a sovereign debt crisis, an immigration wave and Brexit. However, the lockdown recession caused by the coronavirus represents the greatest challenge the EU has faced since World War II. The European Central Bank has been aggressively implementing accommodative monetary policies for over 8 years through low to negative interest rates and a massive expansion of its balance sheet, but more undoubtedly needs to be done.
How do taxes work on these retirement plan distributions?
Generally, basis is created when you contribute to your retirement plan and it is not deductible for New Jersey state income taxes. In New Jersey, this applies when you contribute to a retirement plan such as a 403(b) plan, a 457 plan, a SEP, or any other retirement plan contribution other than a 401(k), said Patricia Daquila, a certified financial planner and certified public accountant with Lassus Wherley, a subsidiary of Peapack-Gladstone Bank, in New Providence.
early retirement is tempting now. don't do it.
The coronavirus is tempting those of a certain age to stop working. Some financial advisers report that they’re hearing from older clients who’ve grown accustomed to staying home and are worried about commuting and returning to crowded workspaces. If they were planning on retiring in the next couple of years, their thinking goes, why not just pull the trigger now?
It's important not to underestimate how much money will be needed to retire comfortably. Some people mistakenly think that their spending will be greatly reduced in retirement, which isn't what usually happens, according to Diahann Lassus, a financial planner in New Jersey. Retirees end up filling their time with activities that come with expenses, she said.
smart money moves to weather the financial storm
Hold off on significant financial decisions, like buying a new house or retiring. “Press the pause button and reevaluate your situation,” recommends Dawn Brown, a wealth adviser at Lassus Wherley in New Providence, New Jersey.
Another reason not to hand in your notice: “If your industry is shaky, you may get laid off and could possibly collect unemployment benefits for a while,” says Lauren Locker, a financial planner in Little Falls, New Jersey. “That way, you can delay your decision to retire until you can better assess your finances.”