What Seniors Need To Know About The Cares Act

What Seniors Need to Know About the CARES Act

If you’re in retirement or in the planning stages, here’s what you should know about the CARES Act.

Updated on May 29 2020


The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is our nation’s response to the current crisis. This bill has supplied $2.2 trillion for COVID-19 relief efforts supporting people and small businesses. Such a large bill includes many different areas of focus, and some may not be all that relevant to you. If you’re in retirement or in the planning stages, here’s what you should know about the CARES Act:

You could receive a stimulus check

This is likely the aspect of the CARES Act that will affect you most directly. Individuals can receive up to $1,200 for their stimulus payment with an additional $500 per dependent child. To receive the full amount your annual income for your 2019 or 2018 tax return cannot exceed $75,000. Your stimulus check is calculated based upon your 2019 tax return. If you have not yet filed for 2019, your 2018 return will be used.

If your income was more than $75,000 but less than $99,000, you will still receive a stimulus check. However, it will be for a reduced amount, depending on your exact income. For married couples, these figures double. So, a couple must have earned less than $150,000 combined to receive a full payment.

If you meet these requirements, you may qualify for a stimulus payment. And, you may have already received yours. But, if you haven’t, don’t worry. There are several reasons why your payment may be delayed. This payment could make a big difference in your short-term finances. You may use it to pay down some debt, or improve your situation while following physical distancing guidelines. But, how you spend this payment will depend on your specific circumstances.

Required Minimum Distributions are suspended

The CARES Act has also implemented changes regarding required minimum distributions (RMDs) from retirement accounts. Once you reach a certain age, either 72 or 70 years and six months depending on the year you were born, you are required to make certain minimum withdrawals annually from your retirement accounts, aside from Roth accounts. RMDs have been suspended for 2020, so you do not have to withdraw from your 401(k) or IRA if you do not want to.

Typically, you’re required to withdraw annually from these types of tax-advantaged retirement accounts. If you don’t, you’re faced with steep tax penalties on the amount you were required to withdraw. But, with this suspension, you can leave your investments in these accounts for the year without facing any penalties. You may have taken losses due to COVID-19’s impact on the economy and stock market. So, this year you aren’t required to take out any of these savings or investments at a loss. Instead, you can leave these alone in hopes that they’ll recover.

Temporary moratorium on evictions

As many Americans have lost their income and ability to pay rent, the CARES Act has put in place a temporary moratorium on evictions due to non-payment of rent during the COVID-19 outbreak for qualifying housing. If you have been unable to pay your rent, you may already have felt the effects of this moratorium. And, states are passing individual moratoriums on evictions with broader coverage to more households. So, if your housing situation does not qualify for coverage from the federal moratorium on evictions, your state government may have extended you some protections.

Paycheck Protection Program (PPP)

Even if you’ve already retired, you may still be working in some capacity. If you work for a small business, the Paycheck Protection Program may be benefiting you. This program was designed to support small businesses that have been affected by COVID-19 and its economic impact. To qualify as a “small business” in this context, a company must have less than 500 employees. The CARES Act supplied this program with $350 billion in funding. Small businesses can receive up to $10 million in forgivable loans. These loans can be forgiven if they are used to cover payroll expenses for employees making up to $100,000 per year. This means that, if you work for a qualifying small business, you could find yourself with increased job security despite our economic situation, if your employer has received loans through the paycheck protection program.

The CARES Act contains an unprecedented amount of aid and will help us combat the economic threats brought on by COVID-19. While the bill contains a great deal of legislation and funding, these are the areas most likely to affect you if you’re in or nearing retirement. As we continue to deal with times of financial difficulty and social anxiety, remember not to panic. If you’re feeling anxious about your personal finances, connect with a financial advisor who can assist you digitally.

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