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The lower interest rates go, the more attention you have to pay.

We’re just a little past halfway through the year that has changed the way we live. If someone had told me a year ago that I’d be wearing a mask and carrying Clorox wipes, I would have questioned their sanity. But it’s real. Our nation and the world are in the midst of a horrific pandemic.

From a financial perspective, it’s been extremely difficult for many people. Some have lost their jobs; others have been laid off and have no firm timetable for returning to work. Far too many business owners have closed their doors for good.

And in spite of all this, the markets continue to bounce back. The investment world tends to be forward looking, so you could interpret the markets optimistically.

Earlier this year, as a way to help retirees financially, the IRS suspended the mandatory distribution (RMD) for the 2020 tax year. Unfortunately, some people took their distribution prior to that waiver.The IRS responded by allowing them to reverse their distribution and then extending the deadline to the end of August.

For example, if in January 2020 your RMD was $1,000, you can now reverse the transaction and redeposit the money into your retirement account. But there is a slight catch.

Let’s say you had twenty percent withheld for taxes and only received $800. To totally eliminate the RMD you would have to redeposit $1,000. The $200 tax payment will be an adjustment on your 2020 tax return. It’s somewhat complicated, but probably worth the effort if you don’t need the withdrawal right now.

I’m amazed that the 10-year U.S. treasury yield is less than 0.7 percent. That’s good news for homebuyers. Mortgage rates are as low as I can ever recall. To say we’re in a low interest rate environment is an understatement.

Unfortunately, a low yield on bank deposits is not good news for financially conservative people who traditionally use such interest to supplement their incomes. This low interest environment puts many conservative investors in a precarious predicament.

They could be faced with systematically depleting their nest eggs. But perhaps even worse, they might be forced into considering investments that are a bit on the risky side. In years past, many financial experts and advisors were comfortable with the 4 percent rule.    

Simply stated, the 4 percent rule says you should be financially comfortable if you limit annual withdrawals from your nest egg to 4 percent. For example, if you had a $100,000 nest egg, you could withdraw $4,000 and keep your nest egg close to intact. 

But in this environment, many believe you should limit withdrawals to no more than 3 percent to maintain nest egg stability. The point is, in this period of low interest rates, you have to be extremely cautious to avoid depleting your nest egg.

You need to pay attention to how you spend your money. You need to pay attention to how you invest your money. You need to pay attention to how Uncle Sam is tweaking requirements like the RMD.

And most important, you need to pay attention to your environment to make certain you put yourself in a position to stay healthy. Anxiety levels may be high, but I’m confident that we will get through this year of the pandemic.