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Here’s what to do if you are feeling the same.
| The motley madman
The coronavirus crisis has had a profound impact on Americans’ long-term financial prospects. Today, 21% of workers say their confidence in being able to retire comfortably has diminished since the start of the pandemic, reports the Transamerica Institute in the recent investigation report Retirement Security: A Compendium of Findings About US Workers .
Considering that 52% of workers have experienced job loss, time off, pay cut or early retirement, this is not shocking. But if you’re feeling less secure about your retirement, here are some steps you can take.
1. Recover from 2020
Before you spend too much energy worrying about your retirement, do your best to recover from the events of the past nine months. Figure out how much debt you’ve had to rack up and make a plan to pay it off. Evaluate your job prospects if you’re out of work, or focus on finding a new job if your pay has been cut and it’s not enough to live on. The start of the year is generally a good time to find a new job, as this is when many companies are renewing themselves. 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 your pension plan once you are in better shape.
Ideally, you will recover from 2020 over the next year or two. From there, your goal should be to start putting as much money as possible into a retirement savings plan. If you still have a way to go until you’re ready to leave the workforce, you may find that knowing that you are making regular contributions to an IRA or 401 (k) helps shape your prospects for the better.
3. Invest your savings aggressively
Putting money in a retirement plan isn’t enough if you want to be more confident about the future. You will also need to fuel the growth of your savings by investing dynamically. For the most part, that means stocking up on stocks, which is a smart bet if you’re at least seven to ten years old before retirement.
Imagine you had to deplete your retirement savings during the pandemic, and at age 40, you are starting from scratch. If you were to put $ 300 per 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 closing balance. of approximately $ 228,000.
Do not despair
Your financial situation may seem grim right now in the wake of the coronavirus pandemic, but unless you are truly on the verge of retirement, there is no need to panic. And even if you are very close to retirement age, there are still steps you can take to remedy the situation. You can try working a few more years, moving to a location where the cost of living is cheaper, or working part-time when you start to retire to generate more income for yourself. If you own a home, you may have even more options, like selling it at a profit, downsizing and using your remaining money as income, or renting a finished basement or garage.
Also remember that it is difficult to look past the pandemic because it is not over. But if vaccines prove to be effective and things improve in 2021, you might have very different retirement prospects around the same time next year.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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