Local Opinion Editorials

As 2019 draws to a close, you may be anticipating – or have already received – a year-end bonus from your employer. Or you might be receiving a substantial cash gift for the holidays. (If you’re really lucky, you might get both.) You can doubtlessly . . . 

When we’re young – that is, before retirement – there seems to be plenty of goodies in Santa’s bag to satisfy even the pickiest present person.

For youngsters and teens, it’s any gizmo that’s electronic, especially if it’s a gadget fresh off the market and unlike what any of their friends may have.

For young and middle-age adults, it’s something fashionable and trendy – anything that says they’re up-to-date and engaged in pursuit of what it takes to be popular, successful and having the “right stuff” when it comes to education, experience, a career and prestige.

But what about those of us who are retired? Most of us don’t want or need the latest cell phone or electronic what-cha-ma-call-it that’s going to frustrate the heck out of us in trying to work it. And if we haven’t got grandchildren handy to teach us how to operate the device, forget it!

After retirement, who cares what we did or didn’t do in school, on our job, or in the community. We might hang on to some of our accomplishments for awhile but eventually we’re going to find ourselves left behind, forgotten and “on the shelf,” so to speak.

Am I being too negative about aging and retirement? But let’s face it. All those things we used to be so concerned about and engaged in are fading into the distance. The advancements being made in the job or career we left behind are passing us by day after day. The connections we had in our community when we needed to know something are changing as well. Ever try to find a business or a person’s address in the phone book? Ever try to find a phone book?

When we used to get together with friends we talked about our job, our children’s school activities and their future, our plans for a larger house, a bigger car, new appliances and lawn equipment, vacations to exotic places and experiences. Now when we gather with those long-time friends we talk about our health, our doctors, our surgeries and those whom we know who are not doing well.

When we travel somewhere, attend an event or engage in any activity, it seems as though everyone is passing us by. We don’t drive and walk as fast, hear and see as well or think and react as quickly as when we were younger.

What can Santa put in our Christmas stocking that will help us older folks achieve increased happiness and fulfillment?

The first gift we need is hope. Hope is what gets us up every morning and moves our feet through each day. Hope is the courage to dream and the wisdom that helps us heal. Hope is a light in the darkness. It’s positive thinking, giving us confidence that most things are going to turn out alright.

Hope is not negative, it’s optimistic. Hope is seeing the glass half-full, even if it contains Ensure. When we are hopeful, we look with anticipation on the bright side of events in our life. We live confidently and unafraid of what the future may bring.

Next, we need charity. While it’s often called love, charity is more than a subjective feeling or even an objective action of the will toward other people. It’s a virtue, which means being more generous with our time, treasure and talent. Charity allows us to give freely without expecting anything in return. We mentioned above that being retired means we’re out of the rat race, so to speak. Most of us, hopefully, don’t need to concern ourselves as much with making a living, getting ahead or raising a family.

We need to look for areas around us where we can give of our time and talent, such as volunteering at a soup kitchen, visiting residents in nursing homes and friends in the hospital. Donations and volunteers are needed everywhere from animal shelters, charities and community centers. It seems that in our busy lives nowadays many of us have forgotten how to appreciate and empathize with others. And when we volunteer our services, we move away from only thinking of ourselves.

Thirdly, I think we need the gift of making good choices. Happiness is a choice, not a trait. We ourselves elect to be happy and content, helping bring fulfillment into our lives. If we visualize the things that worked well in the past, we can apply them to help us find happiness in the future.

By the way, whether you call him St. Nicholas, Kris Kringle or just plain Santa, he’s not just going to pass out these gifts to us on Christmas morning. We’ve got to reach into his bag of goodies and take them for ourselves.

Finally, despite what I said earlier about avoiding electronic gadgets and new technology, let us be open to changes and learn new ways of doing things. Change happens every minute of the day. Happy and fulfilled people embrace change instead of trying to fight against it.

Nevertheless, let us vow this New Year’s Eve to keep our grandchildren’s phone numbers handy, just in case!

As you’re well aware, we’ve seen some sudden and sizable drops in the financial markets in 2019. While market volatility is nothing new, the recent plunges happened during a period of general political and economic unease. Still, it can be harmful to overreact to such events – especially if it means making radical changes to your 401(k).

And yet, many people do just that. During market downturns, investors often move money from their 401(k)’s stock accounts into perceived safer accounts, such as those primarily containing bonds or other fixed-income securities. This move may result in reduced volatility on your 401(k) statements, and if that’s all you want, you might be satisfied. But you do need to realize the cost involved – specifically, fixed-income investments will not provide the same rate of return that equities (stocks) can. So, if you liquidate some of your equity holdings, you may slow the growth potential of your 401(k), which, in turn, could slow your progress toward your long-term financial goals. Furthermore, if you get rid of substantial amounts of your equities when their price is down, you won’t be able to benefit from owning them when their value goes up again – in other words, you’ll be on the sidelines during the next market rally.

Here’s the key issue: A 401(k) or similar employer-sponsored retirement plan is a long-term investment account, whereas moves made in reaction to market drops are designed to produce short-term results. In other words, these types of actions are essentially incompatible with the ultimate objective of your 401(k).

Of course, when the market is volatile, you may want to do something with your 401(k), but, in most cases, you’re far better off by sticking with the investment mix that’s appropriate for your goals, risk tolerance and time horizon. However, this doesn’t mean you should never adjust your 401(k)’s portfolio. In fact, you may well want to make some changes under these circumstances:

You’re nearing retirement – If you are nearing retirement, you may need to prepare your 401(k) for future downturns – after all, you don’t want to have to start taking withdrawals when your portfolio is down. So, if you are within, say, five years of retirement, you may need to shift some, but certainly not all, of your assets from growth-oriented vehicles to income-producing ones.

Your goals have changed – Even when you’re many years away from retirement, you probably have an idea of what that lifestyle will look like. Perhaps you plan to travel for several months of the year or purchase a vacation home in a different climate. These are expensive goals and may require you to invest somewhat aggressively in your 401(k). But you could change your mind. If you were to scale back your plans – perhaps more volunteering, less traveling – you might be able to afford to “step off the gas” a little and invest somewhat more conservatively in your 401(k), though you will always need a reasonable percentage of growth-oriented investments.

By responding to factors such as these, rather than short-term market declines, you can get the most from your 401(k), allowing it to become a valuable part of your retirement income.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

If you’re in the early stages of your working life – or even in the not-so-early ones – the chances are pretty good that you will change jobs at some point. When that happens, you’ll probably leave a few things behind – but will one of them be your 401(k)?

Of course, you wouldn’t really forget about your 401(k). (It does happen, however – over the period from 2004 through 2013, more than 25 million people left at least one 401(k) or similar plan behind when they left their job, according to the U.S. Government Accountability Office.) But you will have to do something with your account.

Essentially, you have four choices:
You can cash out your 401(k). It’s your money, but if you take it out before you reach 59 ½, you will owe federal income taxes, plus any applicable state and local taxes.

Also, you will likely be charged a 10% penalty for early withdrawal. Perhaps even more important, if you liquidate your 401(k) when you change jobs, you’ll be reducing the amount you’ll have left for retirement.

You can leave your 401(k) with your old employer. If your former employer permits it, you can leave your 401(k) intact, even after you move to a different job. This might be appealing to you if you like the investment choices in your account, but you won’t be able to make any new contributions. Plus, you won’t face any immediate tax consequences.

You can move the money to your new employer’s 401(k). You can consolidate your old 401(k) with one offered by your new employer, if allowed. You won’t take a tax hit, and you might like your new plan’s investment options. And you may find it easier to manage your funds if they’re all held in one place.

You can roll your 401(k) into an IRA. You don’t need the permission from any employer – old or new – to move your old 401(k) to an IRA. Your money will continue to grow on a tax-deferred basis, and an IRA offers you a virtually unlimited array of investment options – stocks, bonds, mutual funds and so on. You can make either a direct or indirect rollover. With a direct rollover, the administrator of your old 401(k) sends your money directly to the financial provider that holds your rollover IRA. No tax is withheld because you never actually take possession of the money. With an indirect rollover, you’re technically withdrawing the money and moving it to the IRA provider yourself. (You’ve got 60 days to make this transfer.) You will face a withholding of 20% of your account’s assets, but you may be able to recover most of this amount when you file your tax return. Still, for the sake of ease of movement and avoidance of all tax issues, a direct rollover may be more advantageous.

Which of these options is right for you? There’s no one “right” answer for everyone. You’ll have to consider several factors, and you’ll certainly want to consult your tax professional before making any decision. But in any case, do whatever you can to preserve – and hopefully grow – your 401(k) assets. You’ll need these resources to help fund the retirement lifestyle you want and deserve.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.