But don’t fret.
As Albert Einstein once famously said, every crisis is also an opportunity. And that’s especially true when it comes to considering your retirement account.
Here’s a look at three things the COVID-19 crisis can teach you about retirement:
1. Saving in the good times is sage advice
Before the coronavirus is reported to have shown up in the United States, the stock market was soaring, it seemed like almost everyone you met had a good job and was cruising towards retirement.
Then COVID-19 hit.
Today, more than 60 percent of Americans say their ability to save money for retirement has been negatively affected by the pandemic. Andy why wouldn’t they? The government shut down the economy, companies laid off and furloughed a lot of employees and businesses have gone bust.
In other words, a lot of people don’t have enough money to make their mortgage, much less stock it away in a retirement account.
And that’s why the old adage that encourages you to save in the good times is so important. Stockpiling money when you’re flush makes it easier to keep up with all of your financial obligations when you’re not. It’s a way to recession-proof your retirement account.
2. Make room for medical expenses
Health care is expensive–especially for seniors.
Some estimate that retirees can expect to spend nearly $300,000 on out-of-pocket medical expenses. That’s if they’re covered by Medicare. And that’s without a coronavirus sweeping across the country.
The lesson here is to make room for medical expenses in your retirement planning–and then possibly add a little extra to it. You know, just in case another novel coronavirus decides to rear its ugly head somewhere down the road.
The COVID-19 global pandemic shows just how quickly a public health crisis can emerge out of the blue and reduce your savings.
3. Cash is still king
If you’re like a lot of investors, you enjoyed riding the bull market from 2009 to 2020. What a run! In fact, it was the longest in the history of the market.
And then it turned on a dime.
In what seemed like a blink of an eye, the markets came crashing back down to earth, forcing a lot of people to withdraw invested funds in order to make ends meet and pay for health care.
This is especially tough on older Americans because retirement is no time to pulling money out of your investments. Retirement accounts should be preserved at all cost because you’ll need enough time for them to recover.
One way to protect yourself is to remember that cash is king.
Incorporate cash savings into your retirement planning to help you withstand the next financial downturn. Because, this pandemic is a great reminder that uncertainty is the only certainty.
Need help protecting yourself?
If you want to put together a smart retirement plan, connect with Beah at BD Financial Concepts today. Whether you are just getting started, just about ready to retire or need help recession proofing your retirement money, they can help.