Is COVID-19 affecting your Retirement Planning? Here’s what you should do.
Retirement Planning Financial Planning Risk
This year has been a real eye-opener for many pre-retirees and retirees. Over their lifetimes, most people have heard warnings and advice from retirement advisors about various aspects of their plans. The warnings are typically based on a combination of data and anecdotes and often didn’t hit home or inspire urgency. But the COVID-19 pandemic compressed many events into a short period and affected the entire country. Suddenly, the concerns weren’t theoretical or something to worry about years from now. A long stock market boom also overcame a lot of gaps in plans, or seemed to. When the market indexes dropped quickly in March, the status of many plans suddenly seemed more perilous.
I had the opportunity to share my thoughts with journalists from three top publications on retirement planning in the pandemic, including Rachel Hartman at US News in Retirement planning mistakes to avoid during coronavirus, on what I saw as some of the key problems 2020 revealed in many retirement plans and how you can solve them.
- The best thing to do is to avoid panicking and making drastic changes to your plan. The world is changing quickly and we are not sure how things are going to pan out. If you have an established saving and investing plan, stick with it for now. Your timeline might need to change because of the underlying economic consequences of the pandemic, but don’t make rash moves.
- Unless you can’t pay for food and shelter, you should not postpone funding your retirement during a pandemic, especially if you are only 5 years into funding it.
- It’s hard to start saving again once you’ve stopped. You can’t really make up for the contributions you didn’t make and you will have missed the opportunity to buy funds when they are off, sometimes far off, their highs. When the pandemic is over you’ll have missed a great opportunity. The compounding effect over time is amazing and missing out on that would be a real shame.
- If you learn that your 401(k) match is being reduced or is no longer available, and you aren’t already contributing the maximum amount, you should increase your contribution to offset it, especially now while markets are off their highs. You can buy mutual fund shares much cheaper now. Even if there is a lot of volatility ahead, your returns will be better for it and your retirement more secure.
- As always, the best thing most people can do is to actually plan for retirement. Most don’t. They wing it and maybe it will work out, and maybe not. IF you plan, you actually have a better idea if it’s going to work (and what you need to change if it’s looking like it’s not going to). Don’t be passive in your retirement planning, take charge of it.
Please contact us if you’d like to discuss your financial plan. As always, hang in there.
My name is Mike Garry, and my company is Yardley Wealth Management, LLC. We are a fiduciary, fee-only financial planning, and wealth management firm in Yardley, Pennsylvania (that’s in Bucks County).
Our law firm is Yardley Estate Planning, LLC, and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.
If you’d like to talk about this or anything else, please reach out: 267-573-1019, firstname.lastname@example.org or @michaeljgarry