Knowledge is retirement power

For 2021, the Social Security Administration (SSA) is paying out a Cost-of-Living Adjustment (COLA) of 1.3%. This amounts to about $20 more a month in benefits for the average retired worker and $33 more a month for a typical retired couple, according to SSA estimates. In planning for your retirement income, it’s important to note that any COLA adjustment from the SSA can vary each year and is not guaranteed. For reference, here are the SSA’s Cost-of-Living Adjustments in effect for benefits paid during the last five years:

Year                 COLA

2020                1.3%

2019                1.6%

2018                2.8%

2017                2.0%

2016                0.3%

Q&A

I’m in my mid-20s and I’m not sure how to prioritize my savings goals. Should I put most of it in my 401(k), my emergency fund or toward paying off credit card debt and student loans?

If your 401(k) offers an employer match, you may want to consider contributing enough to get all of those matching funds. It’s basically “free money.” You should then review the interest rates on your credit card debt and student loans. Consider prioritizing the payments on your high-interest debt. Finally, even as you address these priorities, it’s wise to build up a cash reserve for any planned or unplanned expenses. Even if you save a small amount each week or month, it will add up and provide a safety cushion if there’s an emergency — so you don’t need to borrow money or increase any credit card debt you may already have.

Quarterly reminder

This quarter is a good time to start getting organized and preparing to file your tax return in April. Employers usually provide W-2 forms in late January. 1099 forms from banks, credit unions, brokerage firms and mutual funds usually arrive by early February. Create a file as you start to gather the information you’ll need, such as charitable contribution receipts, tax receipts and other documents. If you prepare your own tax returns with software, the current version is probably available now. Be sure to check for updates once you buy the program and before you prepare your return.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

©2021 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.