Why 2021 might be the year of the saver

Crisis and Opportunity: In a Year 2020, I Have Hope for 2021

Why 2021 might be the year of the saver
Image by Comfreak from Pixabay.

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Happy New Year! 2021 could not get here soon enough! Enduring the devastation of a global pandemic, political and social injustice, and the downright small mindedness displayed by people over the past nine months had me ready to kick 2020 to the curb!

I spent New Year’s Eve at home, thinking about the events of the past year. There have been many hardships, but also some blessings. Our country has been in crisis un any other in most of our lifetimes. Yet, I’ve also seen a move toward gratitude and a larger portion of society striving for justice and balance. Is it a silver lining? An opportunity within the crisis?

Crisis and Opportunity Quotes and Meaning

The following quote has been attributed to Alfred Einstein:

“In the midst of every crisis, lies great opportunity.”

President John F. Kennedy told a similar story when campaigning for office in 1959 – 1960:

“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”

As a social worker, I’ve attended many personal development workshops that presented the idea that within a crisis, there is also an opportunity. This may make a good sound bite, but it appears to be a simplification or mistaken translation from the Chinese written language.

In reality, when there is a crisis, we are not thinking about potential opportunities. Rather, we are thinking about how to survive! The Chinese character making up the second part of the word “crisis” means something closer to “change point” or “pivot” – when there is danger, we must watch out and be ready to pivot in order to survive.

How Crisis and Opportunity Have Played Out Here

2020 was a tough year, with one crisis after another. Is there opportunity in the midst of a crisis? Possibly, but not always in the way you might imagine. I experienced a few surprises.

Making Money From Home

Since mid-March, I have been working from home for both my social work job and my speech therapy side job. I am grateful to be able to continue working and earning an income. Especially when I know so many others have lost their jobs. My heart goes out to those who lost a job or had their income reduced.

Oddly, the crisis that kept me at home presented an opportunity to make more money. I do speech therapy on Saturdays, and normally would be driving from house to house to see my clients. However, due to the COVID-19 shutdown, all therapy is done online. Since I don’t have to spend time driving, I have been able to serve even more children on Saturdays.

The benefits of earning more money allowed me to:

  • support local restaurants by ordering take-out
  • make donations to charitable organizations
  • contribute money to political causes I care about
  • support struggling artists by purchasing artwork online
  • donate to the Navajo & Hopi COVID-19 Relief Fund

In the past, I did not talk about our charitable giving. It somehow seemed bragging. However, I have learned that letting others know when you make a donation actually encourages more people to give. Please join us with donations to the Navajo & Hopi COVID-19 Relief Fund or also to Friends In Sonoma Helping (FISH), if you can. Thank you!

Saving Money

It was also a surprise to discover we saved money in some areas. We definitely spent more on nutritious food and supplements to help us stay healthy, but much less in other areas.

For example, we have not spent money on entertainment or events away from home. I have not been driving for work, so we a saved money on gas and car insurance. Normally I pay the car insurance every six months to get a discount, so we’ve been getting rebates each month.

The benefits of saving more money allowed me to:

  • fully fund tax deferred retirement accounts
  • save extra money for retirement in a taxable brokerage account
  • grow our cash savings at the bank, which we’ll use as a buffer in retirement

Stuck At Home

Nothing could be worse than getting a severe case of COVID or even dying from it. Except maybe watching it happen to a loved one. I know people who have been hospitalized or who have died from COVID, but no one in my family has had it, fortunately.

The shutdowns due to the pandemic have been hard on people, though. Many businesses, restaurants, movie theaters and museums closed or were off limits to the public. In some parts of the country people handled the restrictions gracefully, but in other parts, not so well.

At one point, even our local county parks were closed to the public. We had to come up with other things to do while stuck at home. Surprisingly, it wasn’t that difficult. We read books, joined friends and family on video calls, exercised with videos, and lost ourselves researching things on the internet.

Affiliate link for Pure Joy Planet’s plant-based keto program.

Although not a vegetarian, I embarked on a more plant-based keto diet & lost 30 pounds. A few pounds came back, but not quite the COVID fifteen, thankfully! My husband, on the other hand, decided to try making homemade sourdough bread.

In addition, we ordered some mushroom kits and grew our own culinary mushrooms! That was fun, but probably cheaper to just buy the shiitake, trumpet & button mushrooms from the grocery store.

We enjoyed daily walks along the wooded path in our neighborhood (with a mask). Finally, our local parks opened back up. It was great to go hiking again, even with social distancing and masks.

Blogging

When I wasn’t working, I also continued to blog about catching up retirement savings, even after a late start. I’m really grateful to have started this blog, as it is a creative outlet for me. I love the engagement with readers and it is inspiring when others share how they caught up retirement savings, too.

A surprising perk is that I’ve even made a little money blogging! It’s not much, but every little bit helps me to catch-up retirement savings. Because I decided to start a blog as a hobby, I gained new skills. This past year I also had the opportunity to talk about catching up retirement savings after a late start on three different podcasts.

Here’s one of them:

My Final Thoughts on Crisis and Opportunity

Take your pick, there were many crises in 2020. I believe in looking at the glass as half full instead of half empty. The civil and political unrest of the past year sparked a desire in many to learn more about racism and to become more politically active. The pandemic has given us a greater appreciation for our frontline healthcare workers and other essential workers.

The global pandemic isn’t over yet, but a vaccine is on the way. Communities have grown closer, as those of use who can afford to support small businesses and order take-out from local restaurants do so.

The inequities that were always present in our country have been highlighted by the pandemic and there will be a renewed effort to make things right. Important government offices will soon have new leadership.

On an individual level, we’ve had the chance to focus more on simple pleasures, hiking, gardening, and baking bread. New ways were found to stay connected with family and friends, such as through online Zoom meetings. Quite the learning curve for some of us!

For those who have been able to continue working, or who have been able to make extra money from a hobby, it was possible to continue the effort to catch up retirement savings.

We have lots of opportunities to work on in 2021 and beyond. I am hopeful that we will all be able to successfully pivot toward a brighter future.

For ongoing inspiration and creative ideas for catching up retirement savings, subscribe to the blog! And if you enjoyed this post, please share it on social media

Источник: https://www.babyboomersupersaver.com/crisis-and-opportunity-in-a-year-like-2020-i-have-hope-for-2021/

Retirement Savings Contributions Credit (Saver’s Credit)

Why 2021 might be the year of the saver

You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. And, beginning in 2018, if you’re the designated beneficiary, you may be eligible for a credit for contributions to your Achieving a Better Life Experience (ABLE) account.

Who's eligible for the credit?

You're eligible for the credit if you're:

  1. Age 18 or older,
  2. Not claimed as a dependent on another person’s return, and
  3. Not a student.

You were a student if during any part of 5 calendar months of the tax year you:

  • Were enrolled as a full-time student at a school, or
  • Took a full-time, on-farm training course given by a school or a state, county, or local government agency.

A school includes technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, or schools offering courses only through the Internet.

See Form 8880, Credit for Qualified Retirement Savings Contributions, for more information.

Amount of the credit

Depending on your adjusted gross income reported on your Form 1040 series return, the amount of the credit is 50%, 20% or 10% of:

  • contributions you make to a traditional or Roth IRA,
  • elective salary deferral contributions to a 401(k), 403(b), governmental 457(b), SARSEP, or SIMPLE plan,
  • voluntary after-tax employee contributions made to a qualified retirement plan (including the federal Thrift Savings Plan) or 403(b) plan,
  • contributions to a 501(c)(18)(D) plan, or
  • contributions made to an ABLE account for which you are the designated beneficiary (beginning in 2018).

Rollover contributions do not qualify for the credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA, or from an ABLE account.

The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.

Example: Jill, who works at a retail store, is married and earned $41,000 in 2020. Jill’s spouse was unemployed in 2020 and didn’t have any earnings.

Jill contributed $2,000 to her IRA for 2020. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $39,000.

Jill may claim a 50% credit of $1,000 for her $2,000 IRA contribution on her 2020 tax return.

2021 Saver's Credit

Credit RateMarried Filing JointlyHead of HouseholdAll Other Filers*
50% of your contributionAGI not more than $39,500AGI not more than $29,625AGI not more than $19,750
20% of your contribution$39,501 – $43,000$29,626 – $32,250$19,751 – $21,500
10% of your contribution$43,001 – $66,000$32,251 – $49,500$21,501 – $33,000
0% of your contributionmore than $66,000more than $49,500more than $33,000

*Single, married filing separately, or qualifying widow(er)

2020 Saver's Credit

Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contributionAGI not more than $39,000AGI not more than $29,250AGI not more than $19,500
20% of your contribution$39,001 – $42,500$29,251 – $31,875$19,501 – $21,250
10% of your contribution$42,501 – $65,000$31,876 – $48,750$21,251 – $32,500
0% of your contributionmore than $65,000more than $48,750more than $32,500

*Single, married filing separately, or qualifying widow(er)

2019 Saver's Credit

Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contributionAGI not more than $38,500AGI not more than $28,875AGI not more than $19,250
20% of your contribution$38,501 – $41,500$28,876 – $31,125$19,251 – $20,750
10% of your contribution$41,501 – $64,000$31,126 – $48,000$20,751 – $32,000
0% of your contributionmore than $64,000more than $48,000more than $32,000

*Single, married filing separately, or qualifying widow(er)

2018 Saver's Credit

Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contributionAGI not more than $38,000AGI not more than $28,500AGI not more than $19,000
20% of your contribution$38,001 – $41,000$28,501 – $30,750$19,001 – $20,500
10% of your contribution$41,001 – $63,000$30,751 – $47,250$20,501 – $31,500
0% of your contributionmore than $63,000more than $47,250more than $31,500

*Single, married filing separately, or qualifying widow(er)

2017 Saver's Credit

Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contributionAGI not more than $37,000AGI not more than $27,750AGI not more than $18,500
20% of your contribution$37,001 – $40,000$27,751 – $30,000$18,501 – $20,000
10% of your contribution$40,001 – $62,000$30,001 – $46,500$20,001 – $31,000
0% of your contributionmore than $62,000more than $46,500more than $31,000

*Single, married filing separately, or qualifying widow(er)

Additional resources

Источник: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit

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