Farnoosh Torabi
Written by Farnoosh Torabi
Last updated: Mar.10,2022

The worldwide pandemic has brought to light the many financial insecurities people have, and one such insecurity include retirement funds. According to a TransAmerica survey, 23% of workers don' t feel comfortable retiring due to the COVID-19 pandemic

The critical thing to keep in mind is not to make a hasty decision when faced when uncertainty. Market volatility is one of the most common factors to consider in retirement funding, and nearly everybody will experience it once. It' s true that the COVID-19 volatility is unique; it' s still a common aspect for any financial investment. 

Retirement planning isn' t something you set up and forget. You need to constantly watch your accounts to make sure the money works for you to ensure a comfortable retirement. You need to constantly assess and re-assess the plan to ensure your current situation is being met and make adjustments when your needs change. 

Simply put, you need to be proactive in your retirement planning and develop a sound strategy that will help you attain your retirement goals. Each person' s strategy will differ based on how much longer they have until retirement. 

What If You Wanted To Retire Now?

If you wanted to retire in 2021 or even 2022, you might be hesitant to do so because of the pandemic market.  

Most of the 401(k)s have seen a positive trend in the last 12 months after a drop of 20% several months ago.  However, there' s no reason to delay retirement because of the COVID pandemic. Just review your retirement portfolio to make sure it' s all good. You want a set of investments that will keep you comfortable in times like these. 

  • You may be considering buying a retirement property, but this is a seller' s market. 

  • You may consider turning your retirement fund into money, but if the market booms again, you could lose value on the cash because of inflation. 

The best thing to do is stay calm, look over your current retirement situation, and look at all the available options. Conduct some cashflow simulations and stress tests to determine what your retirement portfolio would look like if you began withdrawing now. If your portfolio is diverse, you could be good and not have to make changes. 

You may want to delay retirement if there are sequence risk returns. It' s a concept that denotes how a bad return at the start of retirement could have a negative impact on the fund' s life-long value. 

Think of it this way: you' re young and start seeing your funds making money, but when the market dips, you take out the money, which means the money that would have grown is less. Since it' s a negative market, every withdrawal doesn' t balance out when the market increases, and there isn' t more money in the account to increase again. 

It' s a complex theory, but if you can do a hypothetical scenario on your portfolio, you have a better idea of withdrawing right now will hurt or help your fund.

While people aged 62 can start withdrawing their Social Security benefits, you may want to wait until full retirement age. When you wait for the full retirement age (66 or 67 depending on the year born), your monthly benefits will be more when you retire. 

If you wait to start withdrawing these benefits past the full retirement age, your benefit will increase until 69 years of age. If you continue to work, delaying retirement could increase benefits and give you more income, and this will offset the negative hits to a 40(k) currently happening. 

If you' ve got a risky portfolio, consider moving some investments into stable ones.

If you' re going to retire soon and need help navigating the market' s current setup, talk with a financial advisor. 

Check Out Your Portfolio and Finances Before You Retire 

If your next significant milestone is retirement, you need to start planning it five to 20 years in advance. This is the time to look at your portfolio. You won' t have the timeframe to recover from downturns that the younger generation does, but you can still make some big changes that will have a positive impact on your retirement. 

What can you do to make a positive impact on your retirement?

Pay Debt Off 

Any debt you have should be paid off as quickly as possible, except the mortgage. If there is a recession, you could have less income coming in, and you' ll need what you have to pay for the cost of living expenses and have money set aside for an emergency fund.

Expand Your Portfolio 

Look for several ways to save money for your retirement. It' s also called a bucket plan. Get involved in real estate, save cash, find stability with U.S. Treasury Bonds, and get aggressive in stocks.

Look At Your Investment Strategies 

Be sure to look at your current investment strategy and make changes to get the most out of the market. Dollar-cost averaging is usually suggested for retirement funds.  The key is to decrease the impact of any market downturn and instability by separating the total investment amount.

Work For A Little Longer

A way to increase investments and boost benefits is to work for a little while longer. You don' t have to stay in your current position, but you can do a side job such as freelancing, blogging, online tutoring, crafting business, etc. This can all help in giving you added income. 

You need to be proactive if you want to be successful and retire comfortably. Just remember to look over your portfolio and familiarize yourself with it. Make changes where necessary to stay ahead of the game. 

When Retirement Is Decades Away 

Millennials and Gen Z generations have decades to invest in their retirement, but they must stick to the course. It' s important to note that investing should be seen as a long-term strategy and that any market losses and gains are not going to make a huge difference now. After all, the market will correct itself, and the pandemic is unlikely to affect these generations 40 years from now. 

These generations should begin planning and contributing to retirement as early as they can, using all the time available to them.

It' s essential that everybody begin contributing to their 401(k)s or other retirement funds as often and as much as they can afford. After all, the compounding interest and available tax benefits can add up to over 30 to 40 years.  If there is an employer contribution, people should contribute the amount to get the most out of it. 

According to experts, contributions should be enough to get the employer' s full match. For instance, if a company offers a match contribution of up to 4%, then 4% should be the employee' s minimum contributed amount. The matching benefit is free money and should be taken full advantage of. 

If you have a lot of debt to pay off, be slow in the contributions to pay off the debt and save into your emergency fund. These would help you if a recession were to occur. If you are able, boost contributions when the markets are lower, as this will lead to increased compounds in the next several decades. 

Boost Retirement Savings With A Roth IRA

Regardless of how close or far from retirement you may be, a Roth IRA (individual retirement account) can give your retirement fund a boost.

Use the Roth IRA of your 401(k) if your employer has this option. A Roth will allow you to pay taxes upfront, using the current tax rate instead of when you' re withdrawing during retirement. Best of all, the account will increase tax-free. If you invest in a Roth IRA, it' s an investment of post-tax money for tax-free withdrawals. With a Roth IRA, you are making the most out of your savings. 

And, if your employer doesn' t offer this option, you can open a Roth IRA account for yourself. 

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