Coronavirus has impacted the economy and individual households in many ways. From reduced retirement account values, to loss of work and the need to withdraw retirement funds to meet expenses, you may be faced with some tough questions. We thought it would be helpful to take a look at the Coronavirus impact on retirement planning and provide some helpful considerations.
Reduced Retirement Funds
Most retirement accounts are linked to the stock market, so you’ve probably seen a reduction in the value of your funds. This can be a bit scary. You may be debating whether to stay the course and wait for the market to recover or move remaining funds to something more stable. Before making any major decisions, consult with your financial planner. He/she will help you select the best option given your age, amount of retirement savings, etc. There is no single answer or solution that works for everyone, so obtaining a personalized review of your retirement plan is key.
Loss of Work
If you are currently unemployed or underemployed due to Coronavirus business shutdowns, then you are likely not contributing to your retirement plan right now. Until we know how long this may last, it’s tough to guess whether any adjustments should be made to your retirement plan. Don’t worry about this too much yet. At the next annual review with your financial planner, discuss any concerns that you may have. At that point, you may also have a better picture of where things stand with existing funds amid the market recovery.
Expanded Withdrawal Options
The new stimulus package allows individuals to withdraw up to $100,000 in retirement assets, including from 401(k) plans and individual retirement accounts, as a qualified distribution if that withdrawal is linked to the coronavirus, such as a diagnosis or a layoff. The legislation also states investors can take up to $100,000 as a loan from a 401(k), up from the previous maximum of $50,000. Since you will be reducing your retirement savings, you will need more time to reach your overall retirement goals.
Summary of Coronavirus Impact on Retirement Planning
These are unusual and stressful times. Although Coronavirus impact on retirement planning is worrisome, it is too soon to tell what the long-term effect will be. Before making any major decisions, do some research and consult with experts. Speaking with others can ease some of those concerns and help you make better financial decisions.