The Best 3 Ways to Save For Retirement in the Middle of a Pandemic
The Covid-19 pandemic has ravaged many lives all around the globe, and even the United States has been hit pretty hard. But while the future development of Covid-19 is still mostly uncertain, one thing that is definitely certain is that you are going to hit retirement at some point.
And that is why asking for the best ways to save for retirement in the middle of a pandemic is exactly one of those questions that everyone should be asking themselves right now. After all, the very fact that things are quite uncertain right now means that things could still be going on for a while. And having a massive gap in your retirement planning is never a good idea, whether it is because of a global pandemic like this one, or because of something else.
Now, of course, this does not mean that you should be worried or even panic right now. First of all, if you are still a couple of decades away from your retirement, then you are most likely still going to be able to catch up later. But even if you are already closer to retirement, there are, luckily several options available. To learn about these options, just take some time to read up on them in this article. So, here are The Best Ways to Save For Retirement in the Middle of a Pandemic!
1. Move your retirement age. The first way to save for retirement in the middle of a pandemic is to be flexible with your entry-age to retirement. What this means is that you simply move when you are going to enter retirement ahead by a bit, maybe just a few months but perhaps even by a couple of years.
Moving your retirement age is probably the best option for those people out there who have their retirement preparations mainly locked up in the stock market – which is likely to apply to a large number of people out there. The big downside to saving for retirement with the stock market, though, is that it is quite unpredictable. Especially if something like this pandemic suddenly hits and sends the economy into a downward spiral. If you are unsure about whether adjusting your retirement age in response to the pandemic is a good idea or not, first check what your savings look like right now. Then, contrast that with how far away you are from retirement right now.
Finally, compare the situation to your ideal level of savings that you want to have when you enter retirement. If you are already above that goal, then there is no need to adjust your retirement age, too. But if you are still quite far away from your goal, then keeping your investments in the market for a bit longer can be a good idea, as it will give the market, and that way also your savings, some time to recover and grow. Obviously, this especially applies if you were thinking about retiring within the next two years or so.
2. Keep your funds and assets. As is common knowledge pretty much all around the country right now: The economy is in free-fall. Seeing this, many people out there may think that pulling their money out of funds and assets now is a good idea, to prevent losing even more than they already have.
This makes sense at face value, but before you rush to grab your cash also keep a few other things in mind. Most importantly, consider the restrictions that apply to retirement funds already. For example, if you decide to cash out your 401(k) early, then even if there was no global pandemic right now you would be paying tax penalties for that. On top of those penalties, you are also losing out on all the money that you lost in the current economic downturn.
Because sure, things are looking grim right now. At the same time though, eventually, the economy will improve again. First, the global pandemic will not last forever – at the very least, a vaccine should be developed by this time next year, which means that things will go back up at least then. The point is that if you can, ride out the storm instead of panicking, and things should be fine.
3. Think about where to put your assets. Are you happy with the diversification of your investments? Depending on how far away from retirement you consider yourself to be, it can be a good idea to move some of your assets into different types of investments. The older you get, the more you should put into safer investment options, such as bonds, to make sure your retirement fund retains its value.
If you are still young, you can put a larger proportion into stocks, which is riskier but can also yield a greater reward. Now, with the pandemic still ravaging the United States, it is a great time to take a look at your portfolio and re-evaluate your preferences. Then make sure that your portfolio actually reflects those preferences well. This does not mean that you need to go and take action already, but ideally, you would be ready to do something once experts are able to find a vaccine for Covid-19.
So, the best ways to save for retirement in the middle of a pandemic are to avoid panic, see the bigger picture of economic contraction and expansion, and use the time you have right now to think about how you would like to adapt your portfolio once you get the chance. Then, you should have a pretty good setup going forward!