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Empowering your money

How you should navigate retirement during the pandemic

Dhara Singh
Reporter

As millions of Americans face joblessness and more are worried about their futures, many may have to shift their investment strategies for retirement.

Here’s how to navigate these unprecedented times in the pandemic by following three steps to secure your retirement.

‘Set a vision’ before anything else

Before you crunch retirement numbers during the pandemic, make sure to set a vision of what retirement will look like for you first.

“The first step to take when planning for retirement is to envision what you want that phase of your life to look like,” said Jacqueline Schadeck, financial planner at Sherrill & Hutchins Financial Advisory. “When is that point and how old will you be? Will you be eligible for Social Security or Medicare?”

Before you crunch retirement numbers during the pandemic, make sure to set a vision of what retirement will look like for you first. (Source: Getty Creative)
Before you crunch retirement numbers during the pandemic, make sure to set a vision of what retirement will look like for you first. (Source: Getty Creative)

Only 25% of Americans have even spoken to a retirement professional about their goals, according to a recent study by Charles Scwab, a financial firm, a key step to making sure you have enough during your golden years.

“Once you have the vision for retirement, you can work backwards to figure out what your strategy to get there should be,” Schadeck said. “During the pandemic specifically, what’s changed for you in the short term and how does that impact your long-term retirement goals?”

‘Develop a plan, execute the plan, and stick to the plan’

After clearing up your retirement vision, the next step is to sit down and make a solid plan. Consult with a financial expert if you’re not confident doing this one your own.

“One of the most important things to do during uncertain times is to stay disciplined,” said Luke LLoyd, a wealth advisor and investment strategist at Strategic Wealth Partners LLC, a financial firm. “It’s extremely important to develop a plan, execute the plan and stick to the plan.”

Of the pool of Americans surveyed by Schwab in a recent survey, about 6 in 10 have not touched their 401(k) plans during the pandemic, even when the markets tanked in the spring. But it may have worked in their favor, because the Standard & Poor’s 500 index increased 21% during the second quarter this year, gains you would have missed if you stopped investing or contributing to your retirement accounts.

“While stocks don’t always go up, history tells us that staying invested in a diversified stock fund has rewarded investors with roughly 7% a year return on average,” Lloyd said. “Why is this important? Let’s take this recent coronavirus crash that we just had in March and April. If you had never got back into the stock market, you would have missed out on growth.”

Save money wherever you can

If you’re worried about a trade-off between socking away three to six months of emergency expenses and contributing to your retirement investments, find some savings first to help you meet your goals.

Instead of following the cohort of 20 million Americans who have stopped making regular retirement contributions during the pandemic, according to Edward Jones, look into consolidating high-interest debt into a loan with a lower rate. Or, refinance your auto loan. If you own a home, try refinancing a mortgage to save money on your monthly payment.

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A total of 17.8 million homeowners are eligible to save $291 a month if they were to refinance at the low interest rates offered today.

“Take advantage of this low interest rate environment. When it comes down to it, we are living in a historically low interest rate environment,” Lloyd said. “It may make sense to refinance your mortgage or any other outstanding loans you have if you got them a few years ago at much higher interest rates.”

Dhara is a reporter Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.

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