Navigating the New Normal in Financial Planning
Like many AAA members, both Sterling Retirement Resources and AAA Minneapolis have been adjusting to the new normal of social distancing, remote work environments and virtual meetings. Even as Minnesota starts to slowly open for business, we understand that life is admittedly different for lots of families. For better or worse, there will likely be many business and economic changes that will impact all of us far after the end of the pandemic. To help, we have compiled a few best practices as it pertains to our new normal, from the college process to personal finance.
Navigating the New College Planning Process
As unfortunate as it has been for college graduates in 2020 to not have the expected celebration or ceremony honoring their successes, the current environment is just as daunting for those in high school with the goal of attending a college or university in the near future.
Questions racing through students’ and parents’ minds include: How do I evaluate a college if I can’t visit in person? What is happening with my upcoming ACT/SAT tests? How are colleges changing their deadlines and application processes? Here are just a few items to consider in this quickly changing space:
Virtual Campus Tours
Try connecting with an alum, current student, social media connection or even an employee in the admissions office of the college you’re interested in and ask them to do a video call with you as they walk around the campus and provide some real-world perspective of the school.
Time with the Career Advising Office
This is often an overlooked item. However, it’s significantly important as you weigh the pros and cons of different colleges and the emphasis that they have (or don’t have) on helping students find jobs post-graduation. If you can’t be on campus in person, this interview may help frame some of the campus culture.
A Gap Year as a Solution
Many news pundits have touted the gap year as an easy solution for aspirational college students to not stress about fall 2020. While certainly an option, many factors need to be included in this decision: Will your college/university hold your acceptance? How is financial aid impacted if you decided to take generals at a community college and then transfer into the college next year? Will your scholarships still be available after taking a year off?
Planning Today in the New Normal
Among the many changes to our normal, everyday lives, families across the country have had to endure significant financial changes due to businesses closing, furloughs, layoffs, pay cuts, etc.... The federal government has intervened with stimulus payments and the passing of the CARES Act (Coronavirus Aid, Relief and Economic Security Act) while many states have had to deal with the overwhelming increase of unemployment claims. Here are a few important takeaways as they relate to personal finance:
CARES Act Impacts
The CARES Act is a lengthy bill passed towards the end of March that provides temporary changes to many traditional and tax-related laws, ultimately affecting most Americans. Some of the more significant changes include a delay to 2020 RMD payments from IRA or inherited IRA accounts, amendments to retirement plan withdrawal and loan provisions, expanding the use of HSA accounts, federal student loan payment deferrals, and numerous changes to employee benefit provisions. We strongly recommend seeking guidance from your tax or financial professional to understand how you may be impacted.
Unemployment Benefits Are Taxable
An important reminder: Any unemployment benefits (including the temporary extra $600 CARES Act payment) is considered taxable income at both the federal and State of Minnesota level. If not being withheld directly from your payments, make sure to budget for your 2020income taxes next year.
Attend an Event to Learn More
Sterling Retirement Resources has been a longtime provider of education to the members of AAA Minneapolisin areas such as social security, estate planning, retirement planning and college planning—some of you reading this may have attended one of our complimentary workshops in the past. We are thrilled that for the first time we will be hosting a virtual educational series this summer to the members of AAA Minneapolis. We will be providing two separate programs: Navigating the New Normal College Planning Process in collaboration with College Inside Track and How to Plan in the New Normal Today. Check out our Events Calendar to find upcoming sessions.
Steven C. Finkelstein, CFP®, Megan E. Gehrman, CFP®, and Luke J. Strom, CFP® are Financial Advisors at Sterling Retirement Resources, Inc., 8401 Golden Valley Road, Ste 225, Golden Valley, MN 55427. (763) 762-3400.
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