The COVID-19 pandemic has impacted every aspect of our lives and retirement savings has not been spared.
Our health, our finances, our jobs and our lifestyle have been impacted by the pandemic in a myriad of ways. So how will it impact you? Here are some things to consider. Read on:
Job loss
If you or your spouse or partner have lost your job or had your wages cut, you aren’t alone. The pandemic has caused issues for millions of Americans – especially those who own or work at small businesses. There has been some federal aid, but for many people, it isn’t enough. So, many people are dipping into retirement savings to help pay the bills.
While the CARES Act has made this penalty free for now, it can still hurt you in the long run, so we don’t recommend doing this unless it is a true emergency.
Lower contributions
For some people, their employers cut (sometimes temporarily) their wages, meaning retirement savings contributions slowed. This isn’t the end of the world, but you might lose compounding interest – meaning you may not meet your savings goals this year or in the coming years. That may mean you’ll have to work longer and not retire as scheduled.
Losing money
If the economy doesn’t bounce back, you might lose some of your retirement savings – especially if your portfolio is heavily invested in the stock market. If you are young, this might not be a cause of alarm, as the market – historically – has been a good bet. But if you are close to retirement, this could be devastating financially.
What can be done
It isn’t all gloom and doom! You can lower the risk of COVID-19 on your retirement savings – and it is sort of like “wearing a mask” financially. You can:
- Don’t take money out of your retirement accounts if you don’t absolutely need it to survive
- Look for new ways to save
- Increase the diversity of your investment portfolio
- Plan on working a few more years
- Don’t panic!
It’s best to talk to a qualified financial advisor about your options in this time of COVID-19.
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If you have other questions,email us or call 937.308.0758.
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