5 coronavirus lessons for anyone with a retirement fund

Over the last several weeks, our entire reality changed seemingly in an instance due to the COVID-19 pandemic. Stay-at-home orders have been implemented across the country and the world.

Large groups of people are experiencing layoffs and pay cuts. We are seeing the direct impact the COVID-19 has on every facet of our lives – from our social lives, to our daily routines, to our finances. With the markets facing unprecedented changes, there is naturally a heavy focus on how retirement funds are being affected.

Even in the absence of any global struggles, retirement is notoriously difficult to navigate. I learned this first-hand when I was helping my parents plan for their retirement and was faced with the reality that we lack meaningful resources to help plan for this major milestone in our lives. This was the basis on which I founded my own retirement technology company, Kindur and our planning app Silvur, to fill this void and deliver retirement resources to those in need.

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Throw in a global pandemic to the mix, and it is easy to feel concerned about the state of our economy and how this could shake up your financial plans directly as it relates to your 401(k), stock investments, social security, and retirement goals in general.

Prior to COVID-19, I heard anecdotes from clients regarding the concerns they had around the state of their retirement funds. As you can imagine, in the midst of COVID-19, those concerns have grown exponentially, not only for my clients, but also for my family members, friends, and strangers across the country of varying ages and across different walks of life.

In fact, we conducted a survey in April and found that 41.3 percent of Boomers listed losing their retirement savings due to market volatility as a top stressor during this pandemic.

While these anxieties are top of mind for good reason, I find some comfort in knowing that oftentimes, the best learnings are born out of struggles. Here are the lessons we can learn now from financial planning in the face of this crisis. It’s important to take these with us in the future -- even when we think that we have weathered the storm and that we’re in the clear. That way, we can be on an even brighter path for our financial futures.

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1. Remain flexible

Retirees, or those soon to be entering retirement, will be in good shape to weather any storm that impacts finances if there is flexibility built into their plan.

This could mean pulling back on discretionary spending by reviewing non-essential spending (think subscriptions, gifts, or take-out meals) and eliminating as necessary. But don’t give up on enjoying life!

Today, you will find a number of free or low-cost apps where you can tour museums, learn new languages, try new recipes, or play games (remotely) with friends. If reducing expenses is not an option, considering a part-time job could allow you to obtain additional income to cover outstanding expenses.

2. But...have a plan

My biggest tip to people -- especially those in their 50s and 60s -- is to recognize the value of having a plan in place and to have ideas on what plan B might look like.

Too often we might want to make changes based on the activities in the markets, but to successfully plan for your retirement, you need to remain focused on the long-term, while making short-term adjustments that help you weather the storm.

Additionally, implementing an emergency fund into your plan can be beneficial during times of market volatility. Instead of dipping into funds or selling stocks, it can provide you with the necessary resources to take care of your expenses. During your working years in your 30s, 40s, and 50s, I’d recommend 6 months of savings and into your 60s and 70s, it’s advisable to have guaranteed sources of income (social security, pension and/or annuity income) to cover your essential expenses.

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3. Create distance with your retirement accounts

When a crisis strikes and the stock market loses its stability, oftentimes people rush to check their retirement accounts and stock portfolios. I’m sure you have seen countless articles online about early withdrawal from 401(k) accounts due to the pandemic. However, it is best to avoid meddling with these accounts.

Instead, think about setting up an automatic investment plan to routinely contribute to your retirement accounts on your behalf. By doing so, you are creating distance with these accounts that will allow you to avoid dipping into funds that you’ve spent years investing, enabling growth of these funds instead.

4. Lean into government benefits 

When I was helping my parents plan for retirement, I told them not to underestimate how valuable their government benefits are to a healthy financial future. My father delayed his retirement to 70, and once he hit that age in February, he received his first social security paycheck one month later.

Since the pandemic has caused the closure of many physical offices across the country, including the Social Security Administration offices, my advice to those nearing retirement age that it is more important than ever to create an online account at ssa.gov. This way, you can ensure you’re able to take advantage of these benefits under any physical or economic circumstances.

5. Consider delaying (or rethink) retirement 

For people that have worked for decades looking forward to retirement, an extra day, let alone an extra four to five years in the workforce seems impossible. I understand that some might find it hard to accept the reality that at times, delaying retirement is the most financially responsible choice. This act has many benefits, and it can allow your finances to be sustainable for a longer period of time, so it is definitely worth considering not just when times are tough, but as a strategy for long-term financial success.

Particularly now, it’s worth considering due to the recently passed SECURE Act and the new benefits this allows for retirees. As it relates to Social Security, if you wait four years and elect Social Security benefits at age 70 instead of 66, you will receive 132 percent of the monthly benefit.

As I mentioned before, if you are rethinking your retirement, it is worth also thinking about pursuing part-time income to help ease the financial burdens associated with the current climate. We have seen countless new opportunities popping up with needed skill sets that many close to retirement can contribute to. While it is up to you to weigh the pros and cons, these opportunities could provide some cushion to help you feel financially secure.

Once the time has passed, and you are living solely off your retirement funds, you will be happy that you took advantage of these options and an extra few years to allow your accounts to grow.

Rhian Horgan is the CEO of financial technology company Kindur and founder of retirement planning app Silvur. They are dedicated to helping baby boomers retire fearlessly.

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