RETIREMENT REPORT

Your Guide to a Richer Retirement VOLUME 28 | NUMBER 3 | MARCH 2021 | $5.00

whether to proceed. The pandemic has forced the

community to curtail group activities and socializing.
The closure of places where residents congregate
and restrictions on interaction would diminish the very
things they love
most about the se-
nior living commu-
IN THIS ISSUE
nity: the opportunity
to connect with old CONSUMER SPENDING
friends and make 8 | The Art of Getting Discounts
new ones, to do
things and go places 10 | Information to Act On
together. “Although 12 | Your Questions Answered
I realize it’s tempo- MANAGING YOUR FINANCES
rary, the looming 14 | Financial Checkups
question in my mind 16 | Insuring an RV
is what is the new 17 | RV Financing
normal after this is
all over?” says Jack. TAXES
When their apart- 18 | 2020 Returns
ment is ready, prob- INVESTING

A COVID Storm Hits ably in mid-March,

the DeVines will
20 | Bonds vs. Bond Funds

Senior Living have 90 days to exe- RETIREMENT LIVING

IN LATE 2019 JACK AND PEGGY DEVINE, OF SPRING LAKE, N.J.,
and Aiken, S.C., reserved a new apartment at Fal-
cons Landing Life Plan Community, a continuing
care retirement community for former military officers
and high-level federal employees in Sterling, Va. The
JOHN W. TOMAC
cute their contract 21 | Volunteering Virtually
and move in. CCRCs
are essentially insur-
ance companies. They promise you priority access to a
continuum of care for the rest of your life in exchange
for an entrance fee and monthly rent.
Depending on how long it takes for the vaccine to

CCRC was home to Peggy’s aunt, and the couple had roll out and any other surprises COVID has in store,
visited the community many times and made friends Jack believes this spring could be the worst possible
there. Now, however, the DeVines are wrestling with time to make a move from two states. He’s also con-
cerned the community will face strategic challenges
ahead. Falcons Landing has assured him it will try to
be flexible. But “if I’m not confident we can make this
a smooth move, I’ll be biased toward saying no,” says
Jack. If the DeVines decide to postpone the move for
now, they will sacrifice a small part of their deposit,
lose the “primo” unit they originally chose and return
to the end of the waitlist.
Vaccination provides a light at the end of the tunnel
for senior living communities (including independent
living, assisted living, memory care, skilled nursing and
CCRCs), but it’s unclear how long the tunnel is. Even
after widespread vaccination, no one expects an imme-
diate return to normalcy. It will be some time before
masking and social distancing aren’t required and fam-
ily members and other visitors can come and go freely.
All senior living communities face financial chal-
lenges now—more so if they came into the pandemic
that way. So whether you’re considering a move to a se-
nior living community by choice or necessity, it’s more
important than ever to assure yourself of its financial
viability and the quality of life you can expect. In many
communities, the pandemic has tested both.
Brace for Impact
The virus hit nursing homes and health centers within
senior living communities hardest because they care
for those most vulnerable—the oldest and sickest se-
niors. As of late January, the Centers for Medicare and
Medicaid Services reported nearly 550,000 confirmed
cases among residents of nursing homes and more than
107,000 deaths since the pandemic began.
Tragically, many residents have died without family
members present. Pandemic-related government or
community restrictions prohibited visitors, although
CMS recommends that nursing homes allow visits for
compassionate care, including at the end of life, subject
to social distancing and other guidelines.
Many communities disclose the number of COVID
cases, recoveries and deaths among residents and staff
daily and post updates about restrictions on their web-
sites. Look for senior living communities that make
this data available. “[It’s] about transparency. Are they
treating their residents like partners during a really
tough time?” says Justine Vogel, CEO and president of
the RiverWoods Group, which has three CCRC cam-
puses in southeastern New Hampshire. Many current
residents of CCRCs appreciate that they are “in this to-
gether” as a community of friends, adds Brad Breeding,
president and founder of myLifeSite.net, a resource for
CCRC shoppers.
Illness and death from COVID have been lower in
CCRCs because the majority of residents live indepen-
dently and are healthier, while those who need assis-
tance or nursing live apart with separate staff, which
makes containing the virus easier, according to a recent
report by “The Senior Care Investor” newsletter. Un-
der normal circumstances, when you need more care
than you’re receiving currently, some communities al-
low private caregivers to help you in your home, but
others may require you to move to assisted living or
skilled nursing. During the pandemic, sometimes that
meant one spouse moving to assisted living or skilled
nursing while the other couldn’t visit because of CO-
VID restrictions.
In fact, socializing for everyone living at these com-
munities has been a challenge during the pandemic,
with visits from outsiders and other community mem-
bers not allowed even for healthy residents. Isolation
accelerates mental and physical decline in seniors.
Some communities have beefed up internet service and
Wi-Fi capability for virtual visits with family members
and provided tablets or other devices to residents who
need them, as well as instruction and technical sup-
port. Some memory care and nursing centers have
scheduled regular video calls between residents and

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MARCH 2021 KIPLINGER’S RETIREMENT REPORT |3


FROM THE EDITOR
If you’re a careful reader of mastheads, you may have
noticed Kiplinger’s Retirement Report has a new staff
member. Senior editor Jackie Stewart is no relation to
the British Formula One racing driver of the 1960s and
’70s, though she is happy to field calls from curious
sources who wonder if she is. Her story about RV insur-
ance appears on page 16. RV sales smashed records in
2020 as Americans turned to campers and mo-
torhomes for socially distant travel.
The pandemic also continues to leave its mark on
senior living, as our cover story explains. Some con-
tinuing care retirement communities faced challenges
even before the pandemic hit. If you or a loved one are
in need of a CCRC, you’ll want to know what to look for.
With tax season in full throttle, you may be grap-
pling with how to factor in pandemic-related relief
measures on your tax return. If your stimulus money
came up short or you rolled back an RMD after paying
taxes on it, check out page 18 for what to do next.
Catherine Siskos
their families. For in-person gatherings, communities
have offered “closed-window visits” and created visita-
tion booths, where people can see and hear each other,
or using plastic sleeves, hug through a plastic barrier.
Communities also have gotten creative by brain-
storming new ways to hold activities. One community
in Florida launched virtual birthday parties, book
clubs, continuing education lectures and wellness
classes, museum tours, art classes and other program-
ming. Communities have live-streamed religious ser-
vices. The RiverWoods held socially distant outdoor
events, including happy hours with individually pack-
aged wine and cheese and a cornhole tournament.
Other examples include hallway exercise or bingo with
residents participating from their doorways, virtual
cooking classes led by the head chef, and residents
walking outdoors or riding adult tricycles. “You can
have fun in a pandemic,” says Vogel.
When visitation isn’t permitted in assisted living or
skilled nursing, staff members have done the best they
4 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
can to keep residents engaged with one-on-one visits
and activities, says Debra Feldman, a senior care man-
ager in suburban Chicago.
Safety, of course, remains paramount, and all com-
munities should be able to demonstrate that they have
a solid plan for early detection and prevention of not
just current but also future outbreaks of disease. Along
with reassuring you, those plans serve as an important
marketing and sales tool, says Breeding, who is also the
author of What’s the Deal With Retirement Communi-
ties (People Tested Media, $14.95). “Operators have re-
sponded aggressively and proactively to turn the tides,”
says Beth Burnham Mace, chief economist of the Na-
tional Investment Center for Seniors Housing and
Care. They’ve implemented extensive and thorough
sanitation, contagion protection, infection control,
health screenings and testing protocols. But the cost
has been high, including expenses for extra personal
protective equipment, testing and well-deserved
“hero” pay for staff members.
Labor costs were rising before the pandemic, given
low unemployment and a shortage of skilled workers.
Communities were having difficulty attracting and re-
taining qualified people. COVID made the situation
worse, as staff members left or were absent due to ill-
ness, lack of child care or fear of infecting their fami-
lies. Employers filled the gaps temporarily with expen-
sive agency help.
For residents, the loss of familiar faces meant other
hardships. “Temporary staff may take care of the indi-
vidual physically, but they have no idea about the little
things that person likes. When those niceties can’t be
provided, it makes life miserable,” says Feldman.
If you’re considering one of these communities now,
you’ll want a sense of what the quality of life is like
even at its worst, when residents can’t visit with one
another or enjoy group activities in quite the same way
as before. Virtual tours, which many communities in-
troduced during the pandemic, are a good first step and
should continue to be offered even after communities
reopen fully. “I doubt anyone would move in without
ever actually seeing the community with their own
eyes, but a quality virtual tour can get you a long way
through the process and answer many of your ques-
tions,” says Breeding.
Normally, prospective residents are invited to attend
community events, a great way to get a good feel for
the community and to know people. Ask if you can at-
tend any virtual community events, a substitute for
now. Try to speak with a resident, if possible, too.
Occupancy Rates Under Pressure
Another challenge has been occupancy rates, which
had slipped industrywide before the pandemic because
of overbuilding. Occupancy fell further throughout
2020 as governments and communities imposed mora-
toriums on move-ins; families chose to care for loved
ones at home, at least temporarily; and prospective res-
idents took a wait-and-see attitude.
Throughout the pandemic, CCRCs have had the
highest occupancy rates across all levels of care and the
smallest year-over-year drops in occupancy compared
with other types of senior living. Unlike the Great Re-
cession, the pandemic economy hasn’t been a barrier to
prospective residents, who have had no difficulty sell-
ing their homes or cashing out their equity and paying
an entrance fee. Chances are their investment portfo-
lios have been rising in value, too.
Lower occupancy means lost revenue, which has
forced many communities to tap reserves. By Decem-
ber, those reserves were starting to be tapped out, says
James Balda, president and CEO of Argentum, an asso-
ciation of senior living communities. A community that
is part of a larger system that can help it weather the
storm is likely to be better off than a “single-shingle”
organization with no one to help save the day, says Lisa
McCracken, director of senior living research and de-
velopment at Ziegler Investment Banking.
Rents have been rising about 2% to 3% annually for
the past several years, according to Burnham Mace.
Given the overall economy, raising rents may not be
possible now. As of late last year, many senior living
communities in the U.S. were offering rent concessions
and other incentives to attract new residents. Some
incentives include assistance with moving costs, dis-
counts on entry or monthly fees, and deferred or
waived payments, says McCracken. Once the vaccine
rolls through and occupancy is up, those incentives
will diminish or disappear.
But communities may begin charging à la carte for
ancillary services, including some new ones introduced
during the pandemic. Many communities, for instance,
launched concierge services to take orders for meals
and groceries, get takeout delivered, and more. Now
that many residents have become accustomed to the
concept, the services most likely will be expanded
post-pandemic, says Breeding.
Defaults and bankruptcies didn’t rise in 2020, says
McCracken. But nursing homes hit record-low occu-
pancy in December, and many are poised to fail (see
“Nursing Homes Struggle Most” on page 6). Some
nursing homes have already closed their doors.
When a senior living community fails, generally it is
sold. Every change of ownership, for any reason, has
the potential to disrupt the community. If the previous
owners outsourced the community’s operation to an-
other company, the new owners often keep the same
operating company to increase continuity and stability,
says McCracken.
Waiting lists are a good sign of a stable CCRC, as is a
large share of units that have presold in a new commu-
nity. If you’ve chosen a CCRC but are considering
whether to delay moving in, ask how long the waitlist
is and if you can go back to the end of the line in case
you’re not ready when a unit becomes available. If you
delay, keep in mind that a change in your health status
could prevent your entry into independent living.
Assessing Financial Health
When researching a community, always express inter-
est in learning more about its financial well-being. Ask
for any information that will help give you confidence
that it is well-managed financially today and has
planned to meet its longer-term obligations, says
Breeding. It’s a good sign if staff members are open to
and well-prepared for the discussion.
The higher a community’s occupancy, the greater
its revenue, so start there. Historically speaking, occu-
pancy of at least 90% is ideal, says McCracken. Ask for
the current occupancy rate and several years of histori-
cal averages to determine the pre-pandemic trend.
Also, what is the community or organization doing to
enhance and market itself?
In a CCRC, 95% occupancy is considered full; some
units will always be empty for refurbishment. Plus, you
don’t necessarily want to see full occupancy in a
CCRC’s assisted living facility or skilled nursing unit
because the space may not be available when a resident
needs it, according to the National Continuing Care
Residents Association.
If a community is for-profit and part of a publicly
traded company, you can obtain an annual report and
other financial disclosures. If it’s privately owned,
those disclosures probably won’t be available, but in all
cases, you can ask whether the facility is profitable and
how many times it’s been sold. Nonprofit communities
must file a Form 990 annually with the IRS. Search by
community name at ProPublica’s Nonprofit Explorer
(projects.propublica.org/nonprofits), a database of tax-filing
documents from tax-exempt organizations.
Credit ratings agency Fitch Ratings says the outlook
MARCH 2021 KIPLINGER’S RETIREMENT REPORT |5
for nonprofit CCRCs in 2021 is stable. Most CCRCs are
nonprofits, and state transparency laws often require
CCRCs to provide financial information if you ask for
it. Many communities post their most recent audited
financial statement on their website, but it can be diffi-
cult to interpret. Ask a trusted financial adviser to re-
view the contract and financial disclosures with you.
Breeding says you really want to know if projected
monthly fees will cover operating expenses with a rea-
sonable rate of inflation. Will pricing and reserves
cover future obligations to residents? Any level of debt
the community carries should be reasonable relative to
total assets. To learn about the financial ratios that an-
swer those questions, download the “Guide to Evaluat-
ing the Financial Viability of a CCRC” (info.mylifesite.
net/consumer-guide-to-evaluating-ccrc-finances). Visit
mylifesite.net for useful tools and CCRC information.
Another resource, the “Consumer Guide,” published
by the National Continuing Care Residents Association
(naccra.com), includes information about determining a
CCRC’s long-term financial strength. You can join
NaCCRA for $25 and get access to the guide, as well
as member forums, where current and prospective
residents share information and advice.
An actuarial study, which will factor in the impact
of mortality and morbidity of residents, is the only way
for a CCRC to know whether it can meet its expenses
and other long-term contractual obligations to resi-
dents, including care and a partial refund of the en-
trance fee when a resident departs. One should be per-
formed every two to three years. Ask when the most
recent one was done and whether the community is on
track to keep its promises.
No Regrets
If you need a continuing care community now, don’t let
the pandemic deter you. In early 2020, Steve and Joan
Holmes visited the new campus of the RiverWoods
Group in Durham, N.H. The couple was motivated to
move there by Joan’s increasing lack of mobility, which
forced her to stay “cooped up inside” for a good bit of
the year even before the pandemic struck. The Holme-
ses also wanted to secure the care they may need in the
future without burdening their three children. They
thought the campus was beautiful, and an apartment
was available.
No sooner had the Holmeses listed their home for
sale, then COVID struck and they had to take the prop-
erty off the market. They relisted it in May, and it sold
within a week for a bit under full price. They were able
6 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
to move into their one-bedroom apartment with a
covered patio in mid-July.
Now, Joan can walk everywhere in the community
without impediments. A classically trained pianist, she
enjoys playing the grand piano in the music room, and
she loves not having to cook. Steve enjoys the commu-
nity’s woodshop. They miss the opportunity to social-
ize, and their friends and family members haven’t been
able to visit. But they know the situation is temporary.
“When we can take the masks off, we’ll be really sur-
prised to see what people really look like,” says Steve.
K PATRICIA MERTZ ESSWEIN
Nursing Homes Struggle Most
Nursing homes are suffering “unsustainable financial
strain” due to COVID-related expenses, declining occu-
pancy and loss of revenue as referrals for patients re-
habbing from elective surgery dried up, according to
the National Investment Center for Seniors Housing
and Care. As a group, nursing homes were fragile be-
fore COVID, and they’re worse now. A survey by the
American Health Care Association and National Center
for Assisted Living found that more than half of nurs-
ing homes are operating at a loss and nearly three-
quarters of operators say they won’t be able to sustain
operation for another year at the current pace. Some
facilities have already announced permanent closures.
Most nursing homes that fail will be sold. Sometimes
the transitions are relatively seamless and residents
and families barely notice any change. However, if they
close, moving elderly patients abruptly out of their
communities and forcing them to find new care takes
a heavy toll on them and their families.
Skilled nursing facilities that accept Medicaid or
Medicare, including those inside a CCRC, are rat-
ed by the Centers for Medicare and Medicaid Servic-
es on a five-star scale, based on health inspection re-
sults, staffing data and quality measures. The higher
the star rating and the more nursing hours, especially
RN hours, which are measured per resident per day, the
better. Although the star rating doesn’t reflect the fa-
cility’s financial strength, it’s still a great starting point
for assessing prospective places. Medicare’s online
search engine (medicare.gov/care-compare) can help
you find nursing homes by zip code and compare them,
including their ratings.
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CONSUMER SPENDING
How to Negotiate
for Anything
JULIA BECK , 53, REGULARLY VISITS THE SAME SALON FOR
a blowout of her hair. When the economy tight-
ened, she didn’t want to lose this small luxury
but needed a break on the price. She asked the salon:
“What if I agreed to get my hair done on a weekly
basis. Do you think I could get a better rate?”
The answer: a 20% discount on the price.
Think bigger than negotiating for cars and houses.
Beck and consumers like her have discovered that you
can negotiate a better price for just about any product
or service. “Your cable bill, cellphone bill, credit card
interest rate and even your rent or student loan pay-
ments, these are things that are often negotiable, espe-
cially now,” says Ramit Sethi, the Los Angeles-based
author of I Will Teach You to Be Rich (Workman Pub-
lishing, $9).
“Everything is flexible,” says Kwame Christian, di-
rector of the American Negotiation Institute and au-
thor of Finding Confidence in Conflict: How to Negotiate
Anything and Live Your Best Life (American Negotia-
tion Institute, $16). He is also a business attorney at
Carlile Patchen & Murphy in Columbus, Ohio.
Most people are afraid of haggling and mistakenly
think that extroverted, loud personalities are better at
talking sellers into a good deal. In fact, anyone can
master negotiation skills. It’s not an in-born talent, just
learned behavior and a dollop of courage. “The best
things in life are on the other side of difficult conversa-
tions,” Christian says.
Talk Less, Listen More
Christian once mentored prospective law school stu-
dents to wrangle discounts of $3,000 to $7,000 per year
on their law school tuition. He claims that one reader
of his book negotiated a 50% salary increase. You sim-
ply need to ask.
But make it an open-ended question rather than one
that might yield an abrupt yes or no response. A com-
mon mistake is to ask, “Do you have flexibility?” he
says. Instead, ask: “What flexibility do you have?” This
sets the conversation off on the right foot—with the as-
sumption that there is always some wiggle room.
You’ll find out just how much room there is by lis-
tening more and talking less. In fact, aim to talk only
8 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
about a third of the time. That lets the other person re-
veal more information that you can use to drive a bar-
gain. Plus, by keeping mum, you’re less likely to show
your cards or make a mistake.
Information isn’t the only leverage you have. In fact,
consumers have power, far more than they realize.
“Companies pay hundreds or thousands of dollars to
acquire you as a customer. You have high leverage,”
Sethi says. “Companies want great customers and land-
lords want great tenants.”
If possible, when you negotiate, emphasize your
longstanding tenure as a customer and ask about the
options for lower fees, better rates or improved terms.
Sethi suggests lines like: “Times are tough, and I’d hate
to have to switch accounts because of these fees.”
Know When to Walk Away
You can’t negotiate a good deal if you don’t know what
it is. Before negotiating, research the market condi-
tions and prices. “Come up with a negotiation enve-
lope,” advises Denver-based Andy Seth, a serial entre-
preneur and author of Bling: A Story About Ditching the
Struggle and Living in Flow (Flow Books, $17). “What’s
your floor and what’s your ceiling that you’re going to
walk away from?” If you know those two things, you
can say no without regrets, or suggest a Plan B that
both of you can agree on.
Products with a large profit margin and short shelf
life usually have more flexibility with pricing. Think of
seasonal items, perishables and consumer electronics
that are quickly updated and made obsolete. To bring
down the price, it helps to know which extras you can
live without. Or, you might offer to buy a large volume
in exchange for a per-unit discount.
Pay attention to wording, too. Use “if, then” phrases.
For example: “If I buy this entire case of ribs, then
what’s the best price you can do?”
And don’t forget to consider how the deal looks
from the other side. What are the barriers to agree-
ment, and what might prompt the seller to reconsider?
If your offer gets rejected, ask, “Is there a price you
would accept?”
The best negotiators stand their ground, so practice
saying no. For high-stakes negotiations, such as a job
offer or salary increase, it helps to rehearse the entire
conversation with a friend or family member. “Prepa-
ration is one of the best things you can do to improve
your outcomes,” Christian says. Simply by investing the
time upfront, you’ll be more confident and better posi-
tioned to strike a hard bargain.
 Launch a Charm Offensive
The stereotypical negotiation involves kicking the tires
of a used car and finding product flaws. This is a mis-
take, experts say. People don’t want to do business with
a sourpuss. So introduce yourself by name; ask the
name of the clerk. If you realize you need to speak to a
manager to get a discount, promise to put in a good
word for the person who’s been helping you. “You want
to crank up the kindness,” Seth says. “Be likable, have a
good personality.”
In fact, building on relationships can put cash in
your pocket. Studies shows when people do business
with somebody they like they’re more inclined to dis-
count the price. One study found that people who sold
their homes to buyers they knew gave an average dis-
count of 8%. That’s more than they saved by forgoing
the typical broker’s commission of 3%, Seth says.
Why the difference? “Because there’s a fulfillment
that somebody gets in doing business with someone
they know. That’s known as social capital,” Seth says.
“One of the most underleveraged things in a negotia-
tion is social capital.”
You can ramp up the charm by empathizing with the
other person’s position. Empathy also helps defuse
tense negotiations. Someone who feels insulted or
ISTOCKPHOTO.COM
threatened won’t respond to logic. “When someone is
emotional, they can’t process,” Christian says. “We use
our best arguments at the worst time,” when the other
person is “not at a point where they can process it.”
Christian teaches a three-step “compassionate curi-
osity” framework for negotiations. Step 1: Acknowl-
edge and validate the other person’s emotions. Step 2:
Express interest in their situation by asking probing
questions in a nice way, without blaming, attacking or
judging. “A lot of times we don’t even get to the sub-
stance because we’re failing on the emotions,” he says.
Step 3: Work together to find a solution that both of
you can embrace.
This was the framework his students used to negoti-
ate discounts on law school tuition. “You send a mes-
sage to the scholarship committee. First of all, show
appreciation. Say, ‘I have been accepted to a number of
programs, and I’m asking, what flexibility do you
have?’ 100% of the time that works,” he says.
Be the Exception
The power move in negotiations is asking for a special
deal, something beyond the 10% discount. Something
big. To succeed, you need to avoid what Seth calls “log
rolling,” where you offer $20, the seller asks for $100,
and you meet in the middle at $60. When you hear that
$100 price, you need to respond with outrage—while
staying empathetic and not becoming offensive.
For example, you could say: “I know you have a fam-
ily to feed, but we’re not even close. Let’s do this again,
but give me your best offer.” This technique makes it
clear that the first offer is unrealistic and leaves room
for negotiating. Use this strategy whenever you’re of-
fered something that isn’t comfortably in the middle
of your “negotiation envelope.”
You can also ask explicitly for a special deal, making
it clear that you know the seller is making an excep-
tion. In a negotiation, people are prepared to be skepti-
cal, so you should anticipate the other side’s refusal.
Say: “I know you probably can’t do this, but is there
any way you could ... ?”
Seth used this technique at Best Buy with a sur-
round-sound system in a box that had been opened.
“Open boxes at Best Buy are unbelievable. They’re
100% negotiable,” he says.
He asked the clerk what flexibility the store had and
immediately received an offer of a 15% discount. “Once
I saw they could take off 15% at a whim, I knew there
was way more room to go,” he says. In response, he
thanked the salesperson graciously but said, “We’re not
even close. Could you just knock half of it off? I bet it
doesn’t hurt you on commission.”
The result: a 50% discount on the entire system. K
KATHERINE REYNOLDS LEWIS
MARCH 2021 KIPLINGER’S RETIREMENT REPORT |9
Information to Act On
Economy
■ More signs of a recovery.
Gross domestic product grew
by 4% in the fourth quarter of
2020. Consumers spent more
on services, despite a COVID-
related decline in eating out.
Businesses increased spend-
ing on equipment and inven-
tories. And housing construc-
tion rose to its highest level since 2007. Imports surged as a result,
worsening the trade deficit.
U.S. GDP will return to its pre-pandemic level by the end of
the first quarter. The economy is expected to grow 5.3% this year
after contracting 3.5% in 2020.
Taxes
■ Expect a bumpy filing season. The IRS’s offices and phone
lines are still not fully staffed because of coronavirus restrictions,
so getting live assistance will be hard. Also, the agency is still pro-
cessing a backlog of millions of 2019 returns. Some taxpayers
who filed paper returns last year just as the pandemic hit are still
waiting for their tax refunds. If Congress enacts more stimulus
early in the Biden administration, the IRS’s workload will multiply
even more at the worst possible time, right in the middle of tax-
filing season.
■ Add up those medical receipts. If you are itemizing your de-
ductions, you can write off qualifying medical expenses that are
more than 7.5% of your adjusted gross income in 2020. For in-
stance, if you had $10,000 in medical expenses and a 2020 ad-
justed gross income of $100,000, you can write off $2,500. Ex-
penses that qualify for the deduction include payments to
doctors and dentists, insulin and other prescription drugs, and the
cost of transportation to medical appointments.
■ File early and thwart identity thieves. E-file your return
early to help protect yourself from tax-related identity theft.
Thieves who use stolen taxpayer identification numbers on fraud-
ulent returns to seek improper refunds typically file the phony
returns early in the filing season so that the IRS receives them
before legitimate taxpayers file their returns. But if you file early,
your return will likely arrive at the IRS before a fake return does.
■ You may want to apply for an identity protection PIN. This
is an added security feature to protect you from tax identity theft.
The IP PIN is a six-digit number assigned by the IRS to help verify
a taxpayer’s identity on returns filed either on paper or electroni-
cally. To apply for an IP PIN, use the “Get an Identity Protection
PIN” tool on the IRS’s website.
10 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
Investing
■ Commodities may finally have their time to shine. This
year has all the makings of a bull market for commodities. The
waning of COVID-19, plus easy fiscal and monetary policy in many
major economies, should help juice the global economic recovery,
as well as many commodity prices in 2021.
Several commodity prices are already above their pre-pan-
demic levels. Take industrial metals, prices of which are up 26%
from this time in 2020. Prices of iron ore, the main component in
steel production, are up 83% in that time. Prices of agricultural
commodities are up roughly 28% year-over-year. Demand has
persisted amid the pandemic, and weather difficulties related to
La Niña could limit the availability of such staple crops as corn
and soybeans in 2021.
Oil prices, meanwhile, appear to be holding steady at around
$52 per barrel. Further recovery will depend on whether demand
ramps up in the second half of this year. Also, the recent com-
modities upswing is driven in part by speculation rather than pure
supply-and-demand factors, so keep in mind prices may pull back
later in the year.
Health Care
■ Vaccine winners and
losers. Some states have been
more efficient with the CO-
VID-19 vaccination rollout than
others. As of late January, more
than 11% of Alaska’s popula-
tion had received at least the
first dose of the vaccine. In
West Virginia, more than 9% of its residents had gotten at least
the first shot, according to data from the Centers for Disease Con-
trol and Prevention. Idaho and Alabama lagged the rest of the
country with less than 5% of their residents receiving at least the
first shot.
The Food and Drug Administration’s Advisory Committee on
Immunization Practices offers guidance on who should be priori-
tized for a vaccine, but each state makes the final decision. For in-
formation about who is eligible in your state to receive the vac-
cine, visit the CDC’s website (cdc.gov/coronavirus/2019-ncov/
vaccines). The government and insurance companies are picking
up the tab so you will receive the vaccine for free.
■ Influenza cases are down. The U.S. is on track for a record
ISTOCKPHOTO.COM (3)
low number of flu cases this year. Halfway through the traditional
flu season, only 1% of patients at medical facilities were being
seen for reported flu symptoms, versus 4% to 7% in typical years.
The number of flu deaths so far is only 18% of the total at the
same point last year. The main reason for the dearth of flu cases:
social distancing measures that were implemented to help fight
COVID-19. But there is also speculation that contracting COVID
helps fend off the flu by stimulating the immune system.
■ Another chance at Obamacare. If you missed last year’s Dec.
15 deadline to sign up for health insurance through the Affordable
Care Act exchanges, you have another shot to do so now. A spe-
cial enrollment is currently in effect and will last until May 15.
Because the timing of this enrollment overlaps with tax sea-
son, you’ll have proof of your most recent annual income, which
helps determine whether you qualify for any health insurance
subsidies, including an advance tax credit for reducing monthly
premiums when you purchase a plan through the exchanges. In
the lower 48 states, a family of four with modified adjusted gross
income of $26,200 to $104,800 in 2021 qualifies. For singles, the
income range is $12,760 to $51,040.
Anyone who loses private health insurance—because of a lay-
off or COBRA coverage ending, for example—is always eligible to
sign up for an Obamacare plan outside of the regular enrollment
period. To enroll in an ACA plan, visit the exchanges online
(healthcare.gov).
Technology
■ Restaurant carryout goes contactless. Food delivery robots
are poised to spread rapidly after a banner 2020, as demand for
contactless delivery stays strong. One of the leading providers,
Starship, saw hundreds of thousands of deliveries via its small ro-
bots in 2020, a huge jump versus 2019. The suitcase-size robot
travels at a maximum speed of just under four miles per hour, us-
ing sensors and high-end computer processors to navigate side-
walks and avoid crashes. The company operates in 20 cities, and
its robots make deliveries of food or small packages within a four-
mile radius. Recent success paves the way for faster deliveries and
fewer snafus as more real-world data are fed into artificial intelli-
gence and computer vision systems.
Managing Your Finances
■ Post office delays could cost you. The U.S. Postal Service
had a tough holiday season when some packages were delayed
or never delivered at all. A combination of what the postal service
describes as “unprecedented volume increases and limited em-
ployee availability due to the impact of COVID-19” continues to
disrupt and delay mail delivery.
As a result, if you rely on the postal service to deliver your bills
and payments, you may find they aren’t arriving in time. Through
no fault of your own, you could be stuck with the results: late fees
and even dings to your credit. The disruptions are prompting
more people to adopt online
bill paying. You could also ar-
range a direct debit from your
bank account for either a one-
time or recurring payment.
Travel
■ No backlog for new pass-
ports. The U.S. State Depart-
ment is mostly caught up with
processing passport applications. If your passport will expire later
this year, this may be a good time to renew it. It generally takes 10
to 12 weeks to receive a new passport, or you can pay an extra
$60 to get it faster in four to six weeks. Keep in mind postal ser-
vice delays could extend that turnaround time. If you’re applying
for a passport for the first time, the U.S. Postal Service continues
to offer in-person application services, including passport photos,
at select locations, but they are by appointment only.
■ Vaccinated but with nowhere to go. Foreign travel remains
off limits even for Americans who have been fully vaccinated.
Many countries, including those in the European Union, have been
limiting nonessential travel during the pandemic, with American
tourists banned from visiting. If you’re hoping to vacation abroad
later in the year, you can monitor COVID-related restrictions listed
by country on the U.S. Department of State’ s website. Look for
“COVID-19 Country Specific Information.”
TAX TIP
Request a Penalty Waiver
Retirement sometimes brings special perks, and this
one for the newly retired comes courtesy of Uncle
Sam. Taxpayers typically must pay 90% of what
they owe during the year, or 100% of the previous
year’s tax, through withholding or estimated tax pay-
ments. If they don’t and owe more than $1,000 when
filing a return, they could be hit with a penalty for un-
derpayment of taxes.
There are exceptions to this. Taxpayers who are at
least 62 years old can request a waiver for the year
they retire, as well as the following year, using IRS
Form 2210. The oversight must be due to “reasonable
cause” and not “willful neglect.”
MARCH 2021 KIPLINGER’S RETIREMENT REPORT | 11
FROM THE MAILBOX
Your Questions Answered
The Definition of ‘Days’
A
In your December issue, one of
your articles briefly discussed
Q tax harvesting and the 30-day
wash-sale rule. How does the
IRS define “days”? Are these
business days or calendar days?
The IRS defines them as calendar days, and the 30-
day rule applies before and after the date the invest-
ment is sold. So it’s really over 60 calendar days that
you cannot repurchase a security sold at a loss if you
also want to claim the deduction on your taxes.
No Reporting Required
My wife and I just received our second stimulus payment.
It was transferred directly into our checking account. The
deposit date is Jan. 4, 2021. Should we report this on our
2020 or 2021 tax return?
Stimulus payments are not taxable, so you don’t have
to report it as taxable income on either your 2020 or
2021 return. That said, even though the deposit was
made in 2021, you will need to factor in the amount
you received to calculate your Recovery Rebate Credit,
which is a special credit that only applies to the 2020
tax year.
Like the first one, the second stimulus payment is
considered an advance on that tax credit. The IRS esti-
mated how much stimulus you were owed based on
your 2019 adjusted gross income (2018 AGI was used
for first-round payments if you didn’t file a 2019 re-
turn). If you are owed more money based on your 2020
income, you will get it as part of your tax refund. If you
received more than you should have, you do not have to
return the difference. For more details, see “Navigating
Your 2020 Tax Return” on page 18 of this issue.  the tax consequences are final.
Getting That First Check on Time
I plan to retire this August at my full retirement age of 66
and 2 months. How soon should I let Social Security know
that I want to begin claiming benefits to ensure that I
receive my first check on time?
Let’s be clear about what “on time” means because
even if you give Social Security ample notice, you won’t
get paid in August. Social Security pays one month in
arrears, so your first payment, which is for August,
won’t arrive until sometime in September.
12 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
With that in mind, you should file your application
at least 60 days before the month that you plan to re-
tire, says Jim Blair, a former district manager for Social
Security and currently a co-owner of Premier Social
Security Consulting in Cincinnati. You can apply for
Social Security benefits as early as four months before
that point, he says.
If you expect to rely heavily on Social Security for
your day-to-day expenses or will face big bills the first
month you retire, the delay in payment could hurt.
“People need to plan ahead for that,” Blair says. “You
just need to make sure you have enough money to get
you to that point from when you retire until you get
that first Social Security check, which may be a month
or month and a half later.”
Recharacterization vs. Conversion
Some time ago, you wrote about converting traditional
IRAs to a Roth. Then I saw that the IRS refers to some-
thing called a Roth recharacterization, which are no
longer allowed. What is the difference between a Roth
conversion and a Roth recharacterization?
A Roth conversion is transferring existing funds from
a traditional IRA to a Roth, a move the IRS allows,
though there are tax consequences to consider. You’ll
get the benefit of withdrawing that money tax-free in
retirement, but the downside is that you will owe taxes
on the conversion amount now.
The recharacterization you refer to is reversing that
conversion. For example, if you converted traditional
IRA money to a Roth but then changed your mind, you
can’t undo that conversion by “recharacterizing” the
funds, something that was permitted before 2018. Now,
when you convert the funds to a Roth, the decision and
The IRS, however, does still permit an annual IRA
contribution to be recharacterized. Recharacterizing
in this instance means redesignating some or all of the
contribution, plus earnings, as either a Roth or a tradi-
tional IRA deposit, with the transfer completed by that
year’s tax-filing deadline, including extensions. The re-
characterization is nontaxable, though you will need to
report it and perhaps file an amended return. K
DO YOU HAVE A RETIREMENT-PLANNING QUESTION?
EMAIL IT TO RETIRE@KIPLINGER.COM.
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MANAGING YOUR FINANCES
Your Finances Could Use an Annual Checkup
IF YOU ’RE LIKE MOST PEOPLE , YOU PROBABLY STARTED
off 2021 with lofty goals and ambitious New Year’s
resolutions that by now have long since been aban-
doned. Take heart. There’s one resolution that’s easy to
keep because it’s typically a once-a-year commitment.
Like an annual physical, an annual financial review
can keep your finances healthy. “We all go on this
health checkup every year, but your wealth checkup
could be even more important for your long-term well-
being,” says Daniel Hill, a certified financial planner
and president of Hill Wealth Strategies in Richmond,
Va. A review is worth doing even if it seems like noth-
ing has changed. (Financial planners usually recom-
mend that you review your finances after major life
events or whenever your goals need adjusting.) Best of
all, once you get this job over with, you can generally
forget about it for the next 12 months.
An annual financial checkup is always a good habit,
but “the more volatility and uncertainty in the world,
the more you want to double check,” says Adam Goetz,
a partner at Burstin & Goetz, a financial-planning firm
in Pittsburgh, and the national president of the Mass-
Mutual Advisors Association.
In fact, a financial review may especially be in order
now because 2020 was such a momentous, atypical
year: There were no required minimum distributions,
little opportunity to travel or spend, and an election
that upended the political party in power in Washing-
ton. As vaccinations ramp up and life returns to some
semblance of normalcy, 2021 may look nothing like last
year, and the same may be true of your finances.
Reality Check
The biggest thing likely to change is your budget. “I
asked my friend who owns a dry cleaner how he’s do-
ing and he’s getting crushed,” Hill says. “People just
aren’t spending the way they used to.”
Chances are, you’re spending less on gas, auto re-
pairs, travel and, yes, dry cleaning. On the other hand,
you may be spending more on home improvement, gro-
ceries, online shopping and health care. Meanwhile,
your savings probably got a welcome boost from the
first and second rounds of stimulus money, and a third
round may be headed your way soon.
As you consider what 2021 has in store for your fi-
nances, start by checking monthly bank and credit card
14 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
statements and organize your spending into categories:
housing, groceries, travel, entertainment, and so on.
Then, compare the actual spending with that of prior
years to see how you fared. To balance out unusual
swings, Hill recommends basing your budget on your
average spending for the past three to five years.
You should also check whether you have enough in
cash savings for 2021. “I recommend people divide
their savings in terms of buckets,” says Hill. “For exam-
ple, they might have one account for their emergency
fund, one for the vacation fund, and one for day-to-day
expenses.” Each bucket should have enough to cover
your expected spending. If not, top them up.
Whether you’re retired or not, your emergency fund
should have enough cash to cover at least three to six
months of living expenses. The last thing you want is a
sudden cash crunch forcing you to make a large with-
drawal from your taxable retirement plans, potentially
pushing you into a higher tax bracket.
This is also a good time to check your credit reports
and credit scores from the rating agencies (Experian,
Equifax and TransUnion) and correct any errors you
find. If last year left you with more cash on hand, Hill
suggests putting this money toward paying off credit
card debt and boosting your credit score as much as
possible. “With interest rates so low, this is one of the
best times to have strong credit,” he says. “You could
literally save thousands of dollars by refinancing your
mortgage at a lower rate, thanks to an improved score.”
Upside-Down Allocations
If there’s one thing you probably weren’t expecting last
year, it was a steep market crash followed by a rapid
market climb. G-forces like those can turn a portfolio’s
asset allocations upside down.
For example, let’s say your goal was a 50/50 split of
stocks and bonds, but after 2020’s strong returns, your
portfolio now has 65% in stocks and a correspondingly
higher risk. You need to rebalance, selling stocks and
buying bonds until you get back to your 50/50 target.
Experts recommend rebalancing at least annually,
though Hill tells his clients to do it quarterly.
Goetz says rebalancing is especially important in a
volatile market. “We all hear this advice, we all know
we should do it, but often people just don’t, especially
during good times.” When markets are soaring, there’s
 a real temptation to keep more money in stocks. That’s
a risk people nearing or in retirement, who need to
draw income from their investments, can’t afford.
He tells clients: “Remember what March 2020 felt
like. The goal of your asset allocation is to protect your
portfolio and maintain your long-term income options,
rather than generate immediate gains.”
You should also consider whether your savings will
safely last based on your withdrawal rate, expected re-
turns and tax bracket. “You can’t blindly just take out
4%, 5%, of your
portfolio each
year and hope it
works out, espe-
cially given un-
precedented long
life expectancies
and low interest
rates,” says Goetz.
He notes that
2020 in particular
may have thrown
off some income
plans. “I have
some clients who
went all cash in
March and were
hesitant to get
back in. How will
that impact their safe withdrawal limit?”
A financial adviser can run simulations to see
whether your portfolio can generate the income you
need. You could also run the numbers yourself using
Vanguard’s free Retirement Nest Egg Calculator
(retirementplans.vanguard.com/VGApp/pe/pubeducation/
calculators/RetirementNestEggCalc.jsf).
Planning Ahead
You should also double check the primary and contin-
gent beneficiary listings on your retirement plans and
life insurance policies. “It happens all the time. A client
walks in thinking they’ve got their beneficiary all in or-
der on their 401(k), and then it turns out they didn’t
even have one,” says Hill. It’s a simple fix to name
someone on these accounts. Beneficiaries bypass pro-
bate and receive the funds directly when the account
ISTOCKPHOTO.COM
owner or policyholder dies.
If you’re considering life insurance, Goetz suggests
acting soon. “Not only is protection planning more
important during a pandemic, but pricing is also more
advantageous now than it may be in the future,” says
Goetz. Ultra-low interest rates, along with a potential
higher death rate, has put pressure on life insurers’ as-
sumptions and reserves, so he expects rising premiums
in 2022 and beyond as insurers are forced to adjust.
Tax laws and regulations are in flux, especially with
a new political administration. You may want to meet
with an adviser or an accountant to consider
any material changes and anticipate their effects on
your financial plan. If you’re a do-it-yourselfer, a
class or seminar
through an educa-
tional institution
or nonprofit orga-
nization, rather
than a financial
company’s sales
pitch, may be in
order. “Look for
an instructor
whose top goal is
to teach, rather
than moving prod-
uct,” Hill says.
One notable
change for retir-
ees this year is
that they probably
won’t be getting
another free pass with required minimum distribu-
tions. “The government waived RMDs in 2020, but all
indications are that it won’t be the case for this year,”
Goetz says. If you turned 70½ before the end of 2019,
you will need to resume taking RMDs in 2021. (For ev-
eryone else, RMDs aren’t required until age 72.)
Adding insult to injury is that required minimum
distributions could be higher in 2021. After last year’s
market gains and no forced withdrawals, investment
portfolios have swelled in size. Retirees may need to
withdraw more money just to hit the same percentages
as before.
Goetz suggests using your review to prepare for pos-
sible RMDs. Your adviser, accountant or brokerage can
help you determine how much you must withdraw in
2021. The financial institution where you keep your
IRA also may be able to calculate the amount for you
or have an online RMD calculator that you can use like
this one (troweprice.com/personal-investing/resources/
planning/rmds/index.html) from T. Rowe Price.
K DAVID RODECK
MARCH 2021 KIPLINGER’S RETIREMENT REPORT | 15

MANAGING YOUR FINANCES
Protect Your
Home on the Road
AS AMERICANS WEIGH HOW TO VACATION SAFELY IN THE
middle of a pandemic, sales for RVs are skyrocket-
ing. Total shipments from RV manufacturers were
up nearly 47% year-over-year last December, according
to data from the RV Industry Association. “People are
taking more road trips,” says Laila Ali of Ace RV Sales
and Rentals, a family-run business in Herndon, Va.
Doubling as both transportation and accommoda-
tion, RVs offer vacationers a socially distant way to
travel. But RVs can be expensive, costing anywhere
from less than $10,000 for a travel trailer towed behind
a vehicle to $500,000 or more for a luxury motorhome.
Protecting that investment with the right insurance
is critical. “The RV is potentially your largest physical
asset, in many cases worth as much, if not more, than a
primary residence,” says David Russell, powersports
product manager at property insurer Nationwide.
Special Risks to Consider
Insurance requirements vary by state with three stan-
dard areas of coverage similar to an auto policy: liabil-
16 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
ity, collision and comprehensive—this is protection in
case of lawsuits, accidents and Mother Nature.
Because RVs are big vehicles that can do a lot of
damage in an accident, you will want to pay special at-
tention to liability coverage. Generally, only an RV in-
surance policy will cover liability for a motorhome. For
a travel trailer, liability coverage is typically provided
by the towing vehicle’s policy. If you have a large retire-
ment savings nest egg to protect, you may want to con-
sider additional coverage through an umbrella policy.
Comprehensive and collision coverage will also
vary. Depending on the policy, the insurer may cover a
severely damaged RV in one of several ways. Actual
cash value is the standard and pays the owner what the
RV was worth at the time of the accident, Russell says.
Total loss replacement provides the amount needed to
replace the damaged RV. Under agreed value coverage,
which is typically for classic vehicles, the insurer pays
an amount that was previously settled on, Russell says.
There are other risks a standard RV policy doesn’t
address that you may want coverage for. Because your
RV is also your home on the road, insuring an RV is a
lot different from insuring a car, says John Dixon,
product management director at USAA. You may, for
example, want additional coverage that pays for a hotel
if the RV needs repairs and you can’t stay in it.
Roadside assistance is another option to consider,
says Bert Alanko, profit center leader at MBA Insur-
ance. Having an RV towed can be pricey—up to $130
just for the tow truck to hook up to the vehicle, and
then an additional charge for mileage.
For common claims like theft and vandalism, the
contents inside an RV are generally protected under a
homeowners or renters insurance policy, though typi-
cally with lower limits for covering property away from
home. If your home on the road includes a variety of
expensive electronics and other personal effects, get
extra coverage through your RV policy. Permanent
contents, such as kitchen appliances and bathroom fix-
tures, fall under the comprehensive and collision por-
tions of most RV policies.
Perhaps one of the worst situations RV owners can
find themselves in is a serious accident where the
other driver is at fault and has little to no insurance,
says Joseph Fried, a trial attorney at Fried Goldberg in
Atlanta, who has handled insurance cases involving
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RVs. You could be on the hook for crippling medical
bills if you’re severely injured as well as other damages. 
The minimum insurance required for personal and
commercial vehicles is much lower than people think,
Fried adds. “If you are badly hurt and need medical
care or money because you can’t work anymore, if you
are relying on someone and all they have is $15,000 or
even $1 million worth of insurance, those numbers
aren’t very big in today’s society.”
Adding uninsured or underinsured coverage is rela-
tively cheap, but because of the smaller commission,
insurance agents tend to promote it less, Fried says.   Dixon says. The repair bill runs anywhere from $1,000
Premiums and Discounts
The cost of RV insurance varies widely depending on
the vehicle, the insurer and where you live. At Nation-
wide, a standard policy runs about $100 per year for a
pop-up camper or more than $1,500 for a luxury mo-
torhome. At USAA, which offers RV insurance primar-
ily through a partnering company, Progressive, annual
premiums range from about $100 to more than $3,000
for a travel trailer and from less than $200 to more
than $7,000 for a motorhome. The more expensive the
RV, the higher the premium, Dixon says.
Consumers can save money on yearly premiums by
buying plans with higher deductibles, but this decision
needs to be thought through carefully. Repair costs for
an RV can be “manageable but are not cheap,” Ali says.
For instance, a common insurance claim is for the
damage from an awning that wasn’t retracted properly,
to more than $10,000 depending on the size of the aw-
ning and the extent of the damage, he adds.
Consumers can get additional discounts if they pay
the entire annual premium at once and have a clean
driving record with no accidents or tickets as well as
experience driving RVs, Dixon says.
And shop ahead for a policy. “Before you buy an RV,
call your insurance agent and discuss what you are
planning to buy,” Alanko says. “What’s your range of
costs and options? Does your agent have any sugges-
tions? You don’t want any surprises.” K JACKIE STEWART

This Is What You Can Expect From an RV Loan

An RV’s steep price tag means
owners rely heavily on financing.
Lenders include online and tradi-
tional banks, credit unions and RV
dealerships. Here’s what you should
keep in mind about RV loans.
Loan terms are longer. Some RV
loans rival home mortgages, with
repayment periods ranging from 10
to 20 years for amounts that can
sometimes top $500,000. Aim for
a loan with the shortest possible
term that you can manage.
Lenders are more stringent. The
more you need to borrow, the more
a lender will require of you, says
Gary Ocallaghan, finance director
at Gerzeny’s RV World, a dealer-
ship with four locations in Florida.
“Once you go over the $150,000
mark, you will need to provide ad-
ditional documentation,” he says,
including credit information, tax
returns and personal financial
statements. The buyer’s debt-to-
income ratio, including the project-
ed RV loan payment, must be un-
der 50%, he adds.
Down payments are bigger. Most
lenders require a minimum down
payment of 10% of the sales price,
says Ocallaghan.
Credit scores are higher. A good
credit score for a car loan is typical-
ly 660 or better, but the bar is high-
er for RVs. You’ll need a credit score
of at least 700, Ocallaghan says. “If
your score is under 700, it is difficult
to obtain approval.” Although his
company works with many lend-
ers, Ocallaghan knows of only two
that would approve RV financing
for borrowers with credit scores be-
low 700.
The RV often serves as collater-
al. Most RV lenders will only con-
sider a secured loan that uses the
RV as collateral. Secured loans are
easier to obtain, charge lower inter-
est rates and have higher borrow-
ing amounts than unsecured loans,
which lenders consider riskier. Inter-
est rates for secured loans recent-
ly ranged from 4.2% to nearly 8%
at various banks and credit unions,
depending on borrowing amounts
and the loan term.
Older RVs are harder to finance.
Generally, lenders won’t finance
RVs that are more than 15 years
old. If you are buying an older RV,
you may want to consider a per-
sonal unsecured loan. Lenders
may also require an RV inspection,
which ranges from $150 to $1,200
depending on the vehicle. K
KEMBERLEY WASHINGTON

MARCH 2021 KIPLINGER’S RETIREMENT REPORT | 17

TAXES
Navigating Your 2020 Tax Return
THE CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT
and the COVID-Related Tax Relief Act, which
were both enacted last year, included several tax
breaks to help Americans battered by the pandemic.
Now it’s time to fill out your 2020 tax return by the
April 15 deadline to claim what you’re due.
This year’s tax return may be different because of
the new tax breaks. For many seniors, the changes for
charitable giving, required minimum distributions and
the new Recovery Rebate Credit deserve the most at-
tention, according to Letha McDowell, president-elect
of the National Academy of Elder Law Attorneys.
Charitable donations. If you claim the standard deduc-
tion, McDowell says you can “deduct up to $300 of
charitable contributions” made in 2020. This new
CARES Act deduction is claimed on Line 10b of either
Form 1040 or 1040-SR. There are a few limitations,
though. First, you can’t claim the deduction if you
itemize. Second, it’s only good for cash donations.
Third, donations to donor-advised funds and certain
organizations that support charities are not deductible.
There’s some concern that seniors will overlook this
new deduction, so it’s important to check your records.
“Lots of people will give a little bit here and there and
it’s not a big deal, and if you don’t itemize, you don’t
keep track of it,” McDowell says. “But this year it’s
worth going back and looking at your canceled checks.”
Seniors who itemize get a break, too. The amount
deductible for cash contributions is generally limited
to 60% of adjusted gross income, but the CARES Act
lifted that limit. Instead, the 2020 limit is 100% of AGI
for cash donations to charities. Again, donations to do-
nor-advised funds and supporting groups don’t count.
RMD waivers. The CARES Act waived 2020 RMDs,
and retirees who took one before the legislation was
passed in March were allowed to put the money back.
In fact, if you took an RMD between Jan. 1 and June 30,
2020, you had until Aug. 31 to repay it, with the repay-
ment treated as a tax-free rollover. If taxes were with-
held from your RMD, you had to repay that amount,
too. However, you can reclaim the withheld taxes as a
tax credit on your 2020 return (use Line 25b).
If you didn’t repay any part of an RMD in time (in-
cluding the withheld taxes), what you kept is taxable
income. Any distribution taken in the second half of
2020 is also taxable. You must report taxable distribu-
18 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
tions from IRAs on Line 4b and from a 401(k) or other
pension plan on Line 5b of Form 1040 or 1040-SR.
McDowell also warns: “RMDs are back for 2021.” If
you’re at least 72 years old by the end of the year, you
must take an RMD. If you turn 72 in 2021, you can wait
until April 1, 2022, to take your first RMD. Otherwise,
you must take this year’s RMD by Dec. 31.
Recovery Rebate Credit. The stimulus checks autho-
rized last year were advance payments of a new “recov-
ery rebate” tax credit for the 2020 tax year. If you did
not receive all the stimulus money you were entitled to,
either in the first or second round of payments, you can
still get the full amount you’re owed by claiming the
credit. To do so, file a 2020 tax return and claim the
credit on Line 30. “A lot of seniors, if their only income
is Social Security or Social Security and a small pen-
sion, don’t necessarily file a return,” says McDowell.
“But they have to file a 1040 or 1040-SR in order to get
any additional funds that they didn’t receive already.”
Another stimulus-related reason to file a return is to
have a better shot at getting a full payment if there’s
another round of stimulus checks. Stimulus payments
are easier for the IRS to process if you file a return.
“We don’t know what else is going to transpire,” notes
McDowell. “We’re still in the middle of a pandemic, so
who knows if there’s going to be another round of this.
So even if you don’t think you have to file, file.”
Because of the IRS’s huge backlog of paper returns,
e-filing is recommended. Electronic filing and payment
are the only way to ensure that everything gets filed
appropriately, McDowell says. K ROCKY MENGLE
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INVESTING
Which Are Better,
Bonds or Bond Funds?
WE LIONIZE CREATIVE AND FLEXIBLE BOND FUNDS FOR
puncturing the precept that says it is folly to ex-
pect funds (net of expenses) to outperform their
benchmark indexes. You might believe stock funds
have a better chance at this, but the reverse is true.
Fixed-income teams have a far better record of gener-
ating excess return without taking unusual risks.
The degree to which a fund’s managers, traders and
analysts add risk-adjusted value is called alpha. The
Loomis Sayles Bond fund once had a run during which
it had a better multiyear return than the stocks in the
S&P 500. When the fund launched at the end of 1996,
a 10-year Treasury bond yielded 6.4%. Even after strug-
gling in 2018 and 2020, the fund’s lifetime annualized
total return of 6.9% shines. It is one of our Six Greatest
Generation bond funds.
But 2020 was a rough year, and Loomis, with its
1.9% return, isn’t the only ace that has been trumped:
According to the SPIVA report (Standard & Poor’s In-
dices Versus Active), bond funds are having as much
trouble as stock funds lately in matching their bench-
marks. Only in the intermediate-term investment-
grade bond category are half the funds equal to or
ahead of their bogeys. This departure is not a blanket
declaration to quit active bond funds and switch to
low-cost, index-tracking exchange-traded funds. Be-
sides, Vanguard, the patron of indexing, has some of
2020’s better-performing active bond funds, such as
Vanguard Core Bond (VCORX) and Vanguard Interme-
diate-Term Investment Grade (VFICX). Both are more
than a full percentage point ahead of their category in-
dexes for 2020.
20 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
Of our Six Greatest, Dodge & Cox Income (DODIX)
can also boast of a stellar 2020, up 9.5%, and its 6.7%
annualized return since 1989 is terrific—although it did
have a head start: A 30-year Treasury bond purchased
in 1989 paid 8%. Anyone prescient enough to accumu-
late 30-year bonds 30 years ago made a mint. But
Dodge & Cox Income never extended its average matu-
rity and duration anywhere near that long.
Indeed, guessing interest rates and other gambles
does not define the best bond managers. They take
what yield is available and try to make some good
trades or find bonds that will be upgraded. Bryan
Whelan, managing director of the TCW and Metropol-
itan West funds, says the combination of puny interest
rates and narrow yield spreads over Treasuries in just
about every bond category, plus enormous competi-
tion, limits what bond teams can do to make hay now.
“You can’t get a high yield to carry for 20 or 30 years,
and there’s less alpha available for an active manager,”
Whalen says. “The upside now is to make the upper
single digits,” he adds. “A 20% gain in a bond portfolio
is just not available.”
We would certainly stay with, or buy more of, Met-
ropolitan West Total Return (MWTRX), another of the
Six, whose 8.8% gain for 2020 outdid its comparable
index by 1.2 percentage points despite having a moder-
ate duration. The other three are FPA New Income
(FPNIX), Nuveen High-Yield Municipal (NHMAX)
and Thornburg Limited-Term Municipal (LTMFX).
All had scary falls in March but recovered to maintain
their fine long-term credentials.
Another alternative is to buy some individual bonds
and hold them to maturity. That minimizes costs, sets
a known yield to maturity, insulates you against princi-
pal losses caused by panic selling in mutual funds and
ETFs, and lets you schedule your specific order of in-
come. Despite unprepossessing yields on new bonds,
they are every bit as useful as in those higher-inflation
days when original (nonjunk) issues printed coupons
of 6% and 8%. The events of 2020 do not amend our
conviction that the ideal bond arrangement is a core of
fine active funds, including high-yield and short-term
funds you cannot mimic on your own; possibly a few
discounted closed-ends for extra distributions; and a
finishing course of highly rated individual corporate
and municipal bonds. Now, as to that question in the
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headline: We still love them both. K JEFFREY KOSNETT
Jeffrey Kosnett is the editor of Kiplinger’s Investing for
Income newsletter.
RETIREMENT LIVING
Volunteers Go Virtual to Help Charities
PHIL CHIN LOVED BEING AN ACTIVE MEMBER OF HIS
community in Falmouth, Maine. The 71-year-old
taught safe-driving and fraud prevention courses
for AARP, participated in community theater and sang
in the church choir. Then COVID-19 upended these
cherished activities.
Undaunted, Chin pivoted to volunteering virtually.
State regulations prohibited teaching the safe-driving
courses online, but the fraud prevention classes could
be done remotely. Meanwhile, the theater mounted vir-
tual productions of “It’s a Wonderful Life” and “A
Christmas Carol.” Chin also edited together audio of
the choir’s individual voices to create choral pieces.
“Teaching, acting and singing when there are no live
audiences can be a challenge,” he says. “But in the end,
the results are meaningful and satisfying.”
Chin represents the struggle many volunteers have
faced during the pandemic—adapting to a virtual for-
mat. Before the pandemic, only 19% of volunteers par-
ticipated from a distance, compared with 65% during
the coronavirus outbreak, according to Fidelity Chari-
table, an independent public charity and the nation’s
largest grant maker, with $5.2 billion in donor-recom-
mended grants. “With so much upheaval and uncer-
tainty, people are motivated to do something produc-
tive and positive,” says Mark Silverman, CEO of Amava,
a platform that matches volunteers with charities.
Amava saw a 433% increase in virtual volunteering
in 2020. “Against the backdrop of the work-from-home
revolution, no nonprofit organization that relies on the
efforts of volunteers can ignore the fact that people are
looking for new ways to volunteer,” Silverman says.
Charities take a hit. Nonprofits depend on the free la-
bor of volunteers. Each year, approximately 63 million
Americans donate their time, an average hourly value
of $27.20, according to Independent Sector, an organi-
zation for nonprofits, foundations and corporate giving
programs. When the pandemic hit, those volunteer
hours dropped dramatically. Fidelity Charitable found
that 45% of volunteers contributed fewer hours and
21% stopped altogether. One reason is lack of knowl-
edge: 64% weren’t sure where to find virtual opportu-
nities. “Charities essentially lost access to millions of
dollars in volunteers’ time,” says Amy Pirozzolo, Fidel-
ity Charitable’s head of donor engagement.
The hardest hit organizations were those that rely
on seniors and require close contact, such as food pan-
tries and nursing homes, says Marian Z. Stern, princi-
pal of Projects in Philanthropy, a New York consulting
firm. “Many of the volunteers at these locations are se-
nior citizens themselves, so they didn’t feel safe con-
tinuing on site, not to mention that nursing homes
were closed to all outsiders anyway,” Stern says. “Addi-
tionally, many pantries are hosted by churches and syn-
agogues, and they simply didn’t have the space to have
their volunteers remain socially distant.”
Some organizations lost so much of their unpaid
workforce that they had to hire replacements. For in-
stance, Meals on Wheels hired drivers after losing
many volunteer drivers early in the pandemic.
To help organizations cover these expenses, some
people who can’t volunteer their time may want to do-
nate money instead. “If there is not a great match or
way for you to volunteer, consider how increased fi-
nancial support might help your favorite charity offset
the loss in volunteer support,” Pirozzolo says.
Find the right opportunity. Because volunteering is a
huge commitment, research the charities that address
the causes you care about, and then ask these nonprof-
its how you can help, whether virtually or in some
other socially distant way. “Putting a bit of thought
and time into it on the front end makes for more pro-
ductive commitments and connected volunteers,”
Amava’s Silverman says. “A volunteer who goes into an
experience with a clear set of goals and a defined pur-
pose usually makes a great contribution.”
MARCH 2021 KIPLINGER’S RETIREMENT REPORT | 21
 Amava designed a one-hour process to help partici-
pants identify the volunteer opportunities that fit them
best. Called a Circle, the process includes a list of ques-
tions, a group brainstorming session and personalized
curated options for each person. Sometimes those op-
tions involve using existing skills in new ways.
At the National Cathedral in Washington, D.C., the
extra demands of providing emotional support and
pastoral care during the pandemic overwhelmed the
paid staff and clergy. Mary Wright Baylor, 67, of Spring-
field, Va., was able to help the congregation using her
skills as a retired psychiatric parish nurse with training
in end-of-life care. She has hosted phone and video
calls with parishioners diagnosed with COVID-19.
In one difficult situation, a parishioner contracted
COVID-19 in a nursing home, where she was isolated.
Baylor talked and prayed with the woman over an
iPhone multiple times. As a licensed pastoral leader,
Baylor was even able to administer last rites virtually.
She held an outdoor memorial service at another con-
gregant’s home, which she felt was an honor at a time
Are You a Good Match?
The best relationships between volunteers and
nonprofits are those that are in sync. You’ll have a
more satisfying experience if you and the organization
where you volunteer share the same ideals and have
agreed from the outset what the expectations on
both sides are. Gauge whether you and the charity are
a good match by asking these six questions, which are
meant to elicit not just a candid conversation but also
a little soul-searching on your part.
Do you believe in the organization’s charitable
mission?
Have you clarified the time commitment and
expectations?
Are your skills and knowledge a good fit with
the organization’s needs?
Are you hoping to learn something new or
exercise your existing abilities?
Do you prefer interacting with the nonprofit’s
beneficiaries or staying behind the scenes?
Is connecting with a cohort of volunteers
important to you?
22 | KIPLINGER’S RETIREMENT REPORT MARCH 2021
when so many families are unable to memorialize a
loved one. “I’ve been a resource in that capacity for
our congregation,” she says. “It’s been an extraordinary
privilege and a great outlet for me because it’s so frus-
trating not to help as a nurse.”
Brainstorm new ways to help. Marijke Vroomen Durn-
ing, a 59-year-old writer in Montreal, used to help at
housing shelters and walk dogs for the Society for the
Prevention of Cruelty to Animals. Now that she can’t
give her time in person, she’s started making masks
and giving them to people for free—in return for a do-
nation to her local food bank. “They received dona-
tions from as far away as Hawaii and Sweden,” Durning
says. “I felt very satisfied with my contribution, and it
was just as meaningful as other volunteer work I’ve
done. Sometimes I see people in the neighborhood
wearing one of my masks and it makes me smile.”
Brenda Moss, 59, of Lynchburg, Va., volunteers with
Everytown for Gun Safety by sharing the story of her
son Shawn’s death from gun violence. Because of the
pandemic, she can’t speak to crowds of people or meet
in person with families mourning a loss. Moss typically
hosts the Shawn Moss Angel Tree, a holiday season
event that includes a sit-down meal and gifts for fami-
lies affected by gun violence. Last year, because of so-
cial distancing requirements, the holiday meal was re-
placed with lunches to go, and only one family at a time
was allowed in the building to pick up their gifts. “The
pandemic has changed the way things are done. I have
still found a way to deliver smiles,” she says.
Because it will take time before things return to nor-
mal, charities will need to continue brainstorming new
and ingenious ways to fulfill their missions. “The long-
term implications could be severe, with volunteers not
returning in force until 2022,” Stern says. “I’ve seen
some very creative virtual volunteering, especially
those centering on children. Those who used to visit
schools to read to young children, for example, imme-
diately pivoted to reading on Zoom, often adding flour-
ishes of costumes and story-related backgrounds.”
In a sense, volunteerism has returned to its roots
during the pandemic, Pirozzolo says. In the early days
of the nation, philanthropy consisted of neighbors
helping each other, often centered around the church.
“We are seeing this now in abundance,” Stern says.
“Neighbors are checking in on elderly neighbors, indi-
viduals are bringing food to shut-ins, [and] there are
drive-by visits to people suffering from disease.” That’s
what philanthropy is about—helping others in spite of
the obstacles. K KATHERINE REYNOLDS LEWIS
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