The coronavirus crisis had a profound impact on Americans’ long-term financial prospects. Now, 21% of workers say their confidence in being able to retire in comfort has diminished since the beginning of the pandemic, reports Transamerica. Considering that 52% of workers lost their jobs, had a license, reduced salary or early retirement, this is not shocking. But if you are feeling less secure about your retirement, here are some steps to take.
1. Recover from 2020
Before you spend a lot of energy worrying about retirement, do your best to recover from the events of the past nine months. Find out how much debt you had to accumulate and devise a plan to pay it off. Assess your job prospects if you are unemployed or focus on finding a new job if your salary has been reduced and it is not enough to live on. The beginning of the year is actually, in general, a good time to find a new job, because that is when many company budgets are renewed. Either way, focus on your immediate needs and recovery first, so you can approach your retirement planning from a more stable place.
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2. Increase your contributions to the retirement plan when you are in the best shape
Ideally, you will recover from 2020 over the next year or two. From there, your goal should be to start injecting as much money as possible into a retirement savings plan. If you still have a long way to go before you are ready to leave the job market, you may find that knowing that you are making constant contributions to an IRA or 401 (k) helps to shape your perspective for the better.
3. Invest your savings aggressively
Putting money into a retirement plan is not enough if you want to feel more confident about the future. You will also need to fuel the growth of your savings by investing aggressively. For the most part, this means overloading stocks, which is a smart bet if you’re at least seven to ten years away from retirement.
Imagine that you had to exhaust your savings for retirement during the pandemic and, at 40, you are starting from scratch. If you put $ 300 a month in your retirement account for the next 25 years and invest that money with an average annual return of 7%, which is a few percentage points below the stock market average, you would end up with a final balance of about of $ 228,000.
Do not freak out
Your financial picture may seem bleak now, in the wake of the coronavirus pandemic, but unless you’re really on the verge of retirement, there’s no need to panic. And even if you it is very close to retirement age, there are still steps you can take to save the situation. You can try to work a few more years, move to a cheaper place to live, or work part time during the early stages of retirement to generate more income for yourself. If you have a house, you may have even more options, such as selling it at a profit, reducing the size and using the remaining money as rent or renting a finished basement or garage.
Also remember that the pandemic is difficult to put aside because it is not over yet. But if vaccines prove to be effective and things get better in 2021, you can have a very different perspective on retirement next year.