Even before the current pandemic, many folks were worried that they were unable to afford to retire and might have to keep working later in life. Retirement has been a big issue for people in the United States for many years. In fact, 50 percent of American households of working age were at risk of not having enough saved for their retirement. As the crisis drags on and the economy slowly starts up again, the period of unrest and worry increases and real concerns about the future begin to materialize.
Many American breadwinners have lost jobs during the recent months, or if they own their businesses, they have sustained a huge dent to their bottom lines. Research shows that 11 percent of people have taken money out of their 401(k) accounts, and 17 percent have already withdrawn money from their emergency funds or savings accounts. A study found that one in ten has dipped into their retirement accounts (IRAs). Another found that 30 percent of Americans withdrew an average of over $6,500 from their retirement accounts in the last two months.
Panic seems to be setting in because 20 percent of Americans are already making moves in this direction. The federal government is waiving penalties on retirement account withdrawals if they’re due to the pandemic. It is terrifying to think that over 60 percent of Americans didn’t have emergency savings or would only be able to survive two months or less from their savings before Covid-19. The effects of the global economy shutting down will be felt for a long time after this, but for right now, it’s already having a deep impact on many of our financial lives.
If it’s at all possible, it might be best not to dip into your savings as it will take time to build them back up. Of course, emergency savings are there for exactly this purpose, but your retirement is a long-term plan. Getting professional advice is key to getting through this period of uncertainty. Making rash, ill-informed decisions could derail your future and have a negative impact on you in the long-term. Talk to a trusted advisor before you make any sudden financial moves, and you might save yourself some money and stress.
50 million Americans are over the age of 65 and they experienced the Great Recession, so they have been through tough times before. Most of them saw a loss in the value of their retirement savings and home values last time around, but by 2012, many had recovered almost all of their losses. It worked out after the dust settled that older seniors ended up spending more than other age groups during the Recession.
None of us has a crystal ball we can look into and see the future, so no one could have predicted our current situation. But one thing is certain – at some point, this will all be over, and we will have to return to life and society in some form of normalcy, and when that happens hopefully, we can all come out the other side intact.
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