Retirement planning could turn into a daunting prospect under normal circumstances. But, with COVID-19 creating havoc on the stock market and causing 401 (k) and IRA balances to crumble, it could be challenging to keep a clear head. The turbulent and volatile stock markets at the moment are a matter of concern for everyone, but particularly for those who are in a defined contribution (DC) pension scheme and looking forward to retiring. Here are a few tips to help you out in these uncertain times to maintain your calm and stay on course:
Unfortunately, the recent market downturn might alter your retirement planning. If you are looking to retire this year or even next, you might want to consider it. Early retirement might make things worse as you need to give markets extra time to recover. It’s also too soon to state when the recovery will take place or what it might look like, so you need to be flexible with your financial planning.
Keep extra money for a crunch
If the recent, tragic market crumple has taught us anything, it’s keeping cash reserves as all time, as you cannot predict the markets. You should have a chunk of your savings in cash to cover bills for at least a year or more so that you can smoothly ride out the market dip throughout your senior years.
Don’t dump your mutual funds
As tempting as it might get to redeem your mutual fund investments at this time, do not fall prey to it. Yes, your investments have taken a huge hit, but you only end making them permanent when you decide to sell them. Hence, while it may be nerve-wracking to witness such a damp in your investments, do not give in to your temptations and sell it.
Invest in regulated financial advice
Foremost, a financial advisor can help you to deal with your mental stress which is very common during such times. What’s more, the expert will work out the most tax-efficient plan and would know where to invest to fund retirement goals that will support you throughout your retirement.
Safeguard yourself from scams
Unfortunately during such times of a pandemic when people are vulnerable to their max limit, scammers use this as an opportunity to make some money. Hence, it is important to be on guard at all times.
It would be a good thing if you can save for retirement for a longer duration until the storm calms down. There’s a lot of dubiety in the world today, and while you are trying to map out your retirement plans, it can result in a very stressful situation. Hence, the best you can do is to remain calm, adjust your financial plans as required, and remember that this period, too, shall pass. Maybe, with any luck, you’ll be in a stronger position to retire once it does. Stay calm! Happy investing!