Retirement Hit Hard
When the recession struck between 2007 and 2009, we saw retirement savings take a bashing. This year, COVID-19 decimated the economy, and it looks set to make the recession look like a walk in the park.
To put it in perspective, over the past few months we have added nearly $6 trillion to the national debt, laid-off or furloughed 50 million workers, placed 60 million on food stamps, gone from 3.5 percent to almost 15 percent unemployment, and placed incredible financial burdens upon the petroleum industry, the tourism industry, the service industry, among others. There will, of course, be a recovery seen once things open back up, but the long-term effects are possibly devastating, to say the least.
And to complicate things even more, the stimulus assistance by way of unemployment is, in a lot of cases, paying workers more than they would have earned at their jobs. As a result, some workers aren’t in a rush to get back to the grindstone, and this is slowing the reopening of some businesses.
Regarding retirement, research by TD Ameritrade shows 21 percent of people anticipate the crisis will deliver a severe blow to their retirement blueprint. Half expect somewhat of an impact due to the virus. If we take a look at the numbers, we see that during the recession, 18 percent of Americans said their retirement plans were severely affected, and 40 percent said they were somewhat affected. To make things worse, 43 percent of Americans are still recovering financially from the effects of the Great Recession.
Some age groups are feeling the pinch when it comes to their retirement plans more than others. GenXers (between the ages of 39-54) have been hit hardest. 76 percent say their retirement savings and investment plans have been somewhat or severely affected.
The job losses have been staggering over the last few months across America and the world at large. We are staring at a chasm in front of us that no other generation before has been faced with. [2] Luckily, in May, America rallied back and regained 2.5 million jobs, but it still is not nearly enough. This is affecting millions of us and will affect even more as time goes by, and the full effects begin to show. In the meantime, trying to plan for the future is the best way to spend lockdown time.
Time is one thing that is very valuable, and at some point, it runs out for all of us. How we spend our last few years on this planet is defined by the preparation we have put in for years. Saving, planning, and investing so that down the line we feel safe and secure in the knowledge we can take care of our loved ones and ourselves. COVID-19 has thrown a wrench in the works. Things are bad, and The Standard & Poor’s 500 Index dropped about one-third during the current crisis but compare that to the recession where the stock market tumbled further and faster in the earlier slump, and it took a bigger toll on retirement savings. In the recession, they fell about 50 percent. A market rally since the end of March left the broad index just 5.2 percent below its peak in the middle of February.
Retirement might have been hit hard, but the only way to get through this is to stay the course. The recession hurt many, but at least so far we haven’t hit the lows we saw following 2008 when it comes to retirement.
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