Since the outbreak of coronavirus, the U.S. has seen markets bomb, even after the Federal Reserve took emergency measures to cut interest rates and boost the economy. Stocks continue to swing up and down, and the ongoing volatility has many Americans worrying, scrambling to find safe havens for their money. Some are even questioning whether the U.S. financial system is secure.
In fact, 68 percent feel anxious about the impact of COVID-19 on the financial markets, according to a recent poll.
But financial experts warn Americans not to panic, despite the fear and panic being spread all around us, saying that the U.S. financial system is stronger now than during the last financial crisis in 2008. You surely won’t need to withdraw your money from all your accounts to stuff under your mattress. For one thing, banks are better capitalized than they were in 2008 when the government was forced to bail several out. That means financial companies have the funds to continue to pay depositors and make loans. And unlike the 2008 financial crisis, the origin of the current downturn is not the financial sector, and by all accounts, this situation is temporary.
This “new normal” has certainly had long-lasting effects on people’s physical health, not to mention their financial health — savings, income, employment, as well as many other areas of life. But the lockdown has not only seen folks depending on their savings to get by, but some may also even have been forced to dip into their retirement savings to meet financial obligations. To weather this storm, it’s important to stay inside, wash your hands, reduce spending as much as possible, and continue saving if you have the option.
While the CARES Act provided some economic relief through the distribution of economic stimulus checks and additional unemployment benefits, these measures may not be enough if you were laid off and have difficulty quickly finding a new job. The CARES Act does allow you to make penalty-free withdrawals of up to $100,000 from your retirement account if you meet certain qualifications related to the COVID-19 pandemic.
Those eligible include individuals who are diagnosed with COVID-19, whose spouse or dependent is diagnosed with COVID-19, or who have experienced financial hardship as a result of being quarantined, furloughed, laid off, or have had their hours reduced due to COVID-19. Also eligible are those who are unable to work due to lack of child care or their business not being in operation due to COVID-19.
Making sure that you have enough money saved for emergencies is one thing, but making sure that you have enough put aside or invested to take care of you in later life is even more important. And because of this strange new world we’re living in, some folks may have even been forced into early retirement.
No matter when you retire, you will have to make sure you have the money to do so. The average retirement age is younger than some people expect. It was recently as low as 63. The earlier you retire, the longer you will have to rely on the money you saved or invested. And Americans are living longer and longer. The United States is now home to 72,000 citizens over the age of 100!
If you plan on retiring, or if it’s suddenly become an unexpected reality, you should know how much you need to have saved. Perhaps taking a look at a retirement calculator would be of help.
The fact of the matter is you will have had to start saving early to make sure that you have enough in your nest egg in later life. Americans have not been doing this though, as the stats show in the United States, 56 percent of us have less than $10,000 saved for retirement.
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