Here at Retire Better HQ, we’ve gotten a truthful quantity of e mail on the return of inventory market volatility. U.S. indexes
peaked again in January and have gone on a roller-coaster journey since. Some of the current volatility stems from President Donald Trump’s announcement that he’ll hit China with trade tariffs, and Beijing’s response that it might do the identical to us. In different phrases, a trade war seems to be brewing.
This results in our first query:
I’m 62 and hoping to retire by age 67. I hold listening to how a trade war might harm the U.S. financial system, however what might it mean for an funding portfolio? And what, if something, ought to I do?
“It’s hard to say what stocks may do in a trade war,” says Jeffrey Kleintop, chief international funding strategist and senior vice chairman for Charles Schwab
“The last trade war among major countries was 90 years ago. But it’s probably safe to assume it wouldn’t be good for stocks or bonds. However, rather than make any portfolio changes as if a trade war-driven bear market was imminent, a wiser strategy may be to simply rebalance your portfolio back to your long-term targets. In recent years, stocks have outperformed bonds by a wide margin. If you haven’t rebalanced, the heightened volatility in your portfolio resulting from these trade spats can make you uncomfortable and feel as if you should make major changes or even sell everything. That means what you do next depends more on you, rather than the market or policy makers. If you’ve been underweight stocks and looking for a pullback, this is an opportunity. If you are overweight stocks, it isn’t too late to sell even though stocks are off their highs and back to where they were late last year. Or, do nothing, and allow your long-term perspective and diversified asset allocation do what it is meant to do.”
Kleintop’s recommendation is on the mark. Stick to your long-term plan. Don’t let feelings about present occasions derail it. Whatever your asset allocation—shares, bonds, money—make sure that to rebalance on a common foundation. As traditional, in unsure occasions—and that’s what we’re in proper now—it’s necessary to maintain a clear head—and speak issues over together with your adviser.
Our second query:
I’m retired and questioning if I can nonetheless contribute to a conventional IRA or do I have to be working at a job nonetheless? Thanks!
In most instances—there’s one exception—you can’t contribute to an IRA or a Roth IRA until you’ve got earned revenue. Earned, as in earned from working. That’s why Congress created these retirement automobiles within the first place: to encourage working stiffs such as you and me to save lots of for our golden years. So you’ll in all probability have to return to work. But right here’s the exception: you possibly can contribute to an IRA or Roth IRA when you’re 1) the partner of an IRA proprietor and also you 2) file a joint return.
So in the event you don’t work, however your partner does and contributes to his or her personal IRA, she or he can open an IRA for you. You can put within the distinction between his or her adjusted gross revenue and his or her personal contribution for the yr—whichever is smaller.
If you do return to work and so long as you’re employed, it is best to have the ability to contribute to your employer’s plan no matter your age. If you’re beneath age 70½ and meet related revenue limits it’s also possible to contribute to a conventional IRA or Roth IRA. Whether the IRA contribution is deductible is dependent upon your revenue and whether or not you’re additionally an lively participant in an employer-provided retirement plan. Age limits don’t apply for Roth IRAs, though there are revenue restrictions.
As regular, speak issues over together with your monetary adviser.
Where will you go?
What are the highest three locations you’d like to go to once you’re retired? That’s what we requested final time, and right here have been your prime three solutions:
1. America’s nationwide parks. With Yosemite, Yellowstone and the Grand Canyon topping the listing. Tip: should you’re over 62, you’ll be able to go to any of them for free—for the remainder of your life—by shopping for a one-time $80 Lifetime Senior Pass (plus a $10 dealing with payment). You can get annual passes too, however in case you pay a bit extra you’re good to go ceaselessly. People wish to complain concerning the authorities, however that is one actually great point it does.
2. Europe. With the standard locations like London, Paris and Rome often talked about. Some of you propose to get round by rail—you might stumble upon me at some point—whereas others need to cruise down rivers or steam across the Mediterranean. Seniors get all types of offers on European trains, by the best way. Check them out here.
three. More unique locales. Destinations corresponding to Bora Bora, the Galapagos Islands and Cambodia have been additionally talked about.
Meantime, right here’s a totally different reply, offered by my personal mom when she retired a few years in the past from her job within the Montgomery County, Maryland, faculty system: “I’m going to visit the library more often,” she stated. She and my dad traveled throughout America and Europe—however I nonetheless assume their favourite vacation spot was the “New Releases” part of the library. Books, in any case, convey the world to you in a method like no different. Ponder that.
Here’s our subsequent query
What’s the one piece of recommendation you’d give somebody who’s simply beginning their profession immediately? I’ll go first: Don’t take a job simply because it pays a lot of cash. Write to us at RetireBetterMarketWatch@gmail.com.