The COVID-19 pandemic has wrought a great deal of financial turmoil on Phoenix, AZ residents and their fellow Americans over the last year and a half. In fact, since May 2020, the percentage of Americans who say they are financially struggling went from 22 percent to 46 percent, with 51 percent now saying their ability to achieve their financial goals is out of their control.
To make ends meet, many people have had to borrow or withdraw from their retirement accounts or life insurance policies.
The economy is slowly starting to rebound, but it may take time for people who had been planning for retirement to get back on track with their savings. Here are a few tips for you to consider as you review your retirement planning strategies in the wake of the pandemic.
Take some time to review your life
The last year has brought a whole lot of stress to us all. Many have had friends and family members get sick or pass away, while others have lost work or had to balance a combination of remote work with children. It’s been hard.
You should take a step back and get a big-picture look at your financial circumstances. Your goals may need to change if your circumstances have seen significant changes, and that may require changing your retirement or investment strategy, or reconsidering your risk tolerance.
Give yourself some cushion
Many people have had to take money from their savings over the last year to cover costs, and as many as 20 percent have significantly reduced or even exhausted their emergency savings (and less than half of people even have emergency savings).
It’s important to give yourself some financial cushion, as we are not fully out of the turbulence yet. If you can afford to do so, you should set aside at least three months’ emergency savings. If that’s not feasible, even setting aside $50 to $100 each month to build up this savings will add up over time.
Get back to saving for retirement
It’s understandable if you had to press “pause” on saving money for retirement over the last year, given the financial circumstances we’ve all experienced. Many people had to hold off on savings just to be able to cover their basic expenses.
But as we get back to work and return to as close to normal as we can get, it’s important to get back to saving for retirement as soon as possible so you don’t significantly delay your ability to retire.
As noted earlier, we are not completely out of the pandemic yet, so there will still likely be some market volatility. If you’re a long-term investor, it’s best to just completely ignore market movements and news. There’s especially been a lot of news lately about meme stocks and risky cryptocurrencies. These are not at all worth your energy as a long-term investor. Trust in a financial professional to handle your affairs and keep you headed toward your long-term objective.
For more information about COVID-19 and retirement planning in Phoenix, AZ, contact the experts at Fiduciary Advisors Ltd.