If you feel like the pandemic is derailing your retirement plans, steer clear from these missteps to help keep you on track during these financially troubling times.
With COVID-19 disrupting everything from daily activities to the Dow, it can be tough to set financial goals and make plans for retirement.
In spite of the financial and emotional hardships, it’s possible to set a course for a secure future if you keep a keen eye on these four potential mistakes.
Just because you had a plan in place pre-COVID, that doesn’t mean you can bury your head in the sand and hope for the best. Previous plans may no longer guarantee the future you were dreaming of, so start by revisiting your budgets to reassess whether you need a new plan.
Begin by capturing your monthly bills, and don’t forget to include quarterly or annual expenses as things may have shifted. (See our most recent blog, ‘4 Overlooked Crucial Expenses in Retirement‘). If you find some expenses have dropped in recent months, you can set aside more toward retirement.
And if you’re going through a down period due to losing a job or illness, a budget can help you maneuver through this time. If you haven’t already, check out our retirement calculators here to help get you started.
Under usual circumstances, you’d face major penalties for tapping into an IRA or 401(k) plan prior to age 59 1/2. But thanks to the CARES Act relief package, if you’ve been hurt financially by COVID-19, you can now withdraw up to $100,000 from your retirement savings without incurring a penalty.
However be warned, as tempting as this may sound for the short-term, you’ll risk falling short financially once your career ends and you’re more reliant on your savings. So before reaching into your retirement funds, make sure you’ve exhausted all other options – emergency funds, stimulus payments and loans – to bridge the financial gap.
48% of Americans are pushed out of the workforce sooner than planned, according to a recent report by the Employee Benefit Research Institute. But the COVID-19 crisis could result in an uptick in forced early retirement.
Another 25% percent of respondents listed health issues as the reason for retiring. The older you get, the riskier it is for you if you were to test positive for COVID-19. Because of that, a large number of Americans could decide to leave the workforce ahead of their planned retirement dates.
The total number of workers ages 55+ in the U.S. economy shrank from 37.8 million in February, before the COVID-19-related layoffs began to take effect, to 32.7 million in May. The problem with this statistic is 50% of Americans don’t have retirement savings at all. Working longer typically bolsters financial security because you keep earning and saving and don’t need to dip into your retirement accounts prematurely. That, in turn, allows those funds to continue to grow and rebound when markets are instable.
It’s completely understandable to be frustrated by all the challenges you might face due to the Coronavirus, particularly in respect to your retirement plans. Therefore the idea of calling yourself retired and throwing previous plans away may seem inviting to say the least.
Instead, be relentless with your financial planning. When the pandemic does eventually pass, you will be a bit closer to retirement. What can you do today to be more financially secure when the day comes that work is an option?
Now is the time to take action and gain back control of your future. Saving more, working longer and speaking with a retirement income advisor are all great steps.
If you don’t know where to begin the process or just want to make sure you are on track for financial independence, speak with the retirement income experts at CKS Summit Group to help guide you towards a happier, healthier, wealthier and secure life. Contact us here today for more.