According to an April 2, 2020 article in Forbes, a MagnifyMoney survey found that 38% of investors are worried they’ll lose all their retirement savings due to the COVID-19 outbreak. Millions of Americans have filed for unemployment during this social. This double sledgehammer of job loss and dwindling assets is a hard burden to bear. The need for protecting retirement finances is even greater in the COVID era.
Many people are staying in their jobs and delaying plans for retirement – that is, if they have a job at all. Some are losing sleep due to concern about their future. A lot of us feel that we are in the grip of forces beyond our control – all because of an invisible bug/virus which has potentially done more damage to the economy than anything since the great depression. This loss of control and uncertainty can be as damaging as the financial impact itself.
Here are some things to consider doing (and not doing). After all, sometimes non-action is preferable to action, especially if your action is driven by emotion or short-term panic.
Prepare your financial documents. It’s hard to make financial changes if you don’t have a starting benchmark. Basically, you need to know the details in three areas.
Get relief. If you happen to be one of the many who are taking a big financial hit due to the COVID financial crisis, you may be able to gain relief in the form of delayed mortgage, auto, credit card and other payments – usually without interest or credit report penalty. There are also expanded unemployment and other benefits.
Believe in the future. There have been numerous events that caused the stock market to fall – sometimes major and sometimes minor. These include the Spanish Flu pandemic, Great Depression, World War I and II, Korean War, Cuban Missile Crisis, Vietnam War, SARS, MERS, Swine Flu, Ebola, the 2008-2009 housing crisis, and so forth. You get the picture – life happens. However, all of these events have one thing in common, they did not stop the upward momentum of the market. Don’t forget that lots of people sold stocks when the Dow was at its lowest point in 2008, convinced that the worst was yet to come. Yet, between 2008 and 2020 the index rose almost four-fold before dropping due to the coronavirus crisis. Please don’t be one of those who sells at the low point in the market and buys back in again when stock prices are higher.
Take advantage of the stock sale. Many great stocks are now “on sale”.
Buckle up for the future. You may have heard prognosticators talk about a “V” shaped recovery, meaning that the stock prices imploded quickly but will also come back quickly once they hit bottom. Many health experts predict that the virus will occur in waves, with perhaps significant relief late spring or summer, with another wave of COVID-19 rearing its ugly head this fall. For more about this, read my article about Achieving Financial Peace of Mind in Retirement.
As mentioned above, before acting on these recommendations, particularly the purchase or sale of assets, you should talk to a financial professional about the specifics of your situation. Preferably, use an adviser who specializes in retirement finances instead of an individual who is a financial generalist. Chances are your situation and objectives are vastly different than someone who is decades younger and you want an action plan that reflects this.
Visit here for more information on protecting retirement finances.