When the coronavirus pandemic struck the world, we weren’t prepared for the scale of the situation that would unfold.. "Normal" seems like a lifetime ago and if you are at retirement age, it is a very scary time to be considering what the future may hold.
There are a few mistakes you should be very aware of avoiding at this critical time. COVID set the table for a year of financial uncertainty. By July 2020, in 26 states, more than one-fifth of Americans who rented their homes were behind on payments.
Finding out statistics like that is alarming older folks across the nation. With retirement around the corner, what are the right moves to make to ensure that something like being behind on payments to keep a roof over your head doesn’t happen?
Here are three things that will keep you in the game.
Make sure you have your health taken into account when it comes to your retirement. Thinking you have more disposable income than you actually do is a recipe for disaster down the line. How much is needed for health care costs in retirement?
The Fidelity Retiree Health Care Cost Estimate says that in 2020 an average retired couple age 65 could need as much as $295,000 saved to cover health care expenses alone in retirement. This is after-tax so make sure you do your calculations carefully. Studies have shown that 21 percent of Americans have nothing saved for their retirement at all, and a full third of Boomers have under $25,000 saved.
2. Don’t Make Hasty Investment Decisions
When the world is in turmoil it’s easy to lose sight of your real objectives. No one knows exactly what’s going to happen next with the stock market. Living in fear of a crash or bullish gains is not the way you should treat your future.
“Get professional advice, and don’t take unnecessary risks with your money,” advises Martin Walcoe, president of David Lerner Associates. “Look for the sensible middle ground of investing. It’s better to start planning sooner rather than later.”
3. Stay the course
If it seems like things are tough and you don’t know where to turn, don’t give up on saving or your future retirement. Set goals. Pay into your 401k and IRA the same way you would keep chipping away at your credit card debt. Get yourself into the driver's seat.
“It’s easy to read surveys and reports like these and think retiring is a pipe dream, so why even try to save for retirement,” says Walcoe. “But whether or not you are able to retire comfortably when you want to, is primarily dependant on when you start saving for retirement, how much you save, and how wisely you invest your retirement savings.”
No matter your circumstances COVID-19 will have affected you in ways you could never have predicted. The only way to make certain your future is secure is to get your retirement plan in place and execute it.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC