COVID-19 is changing many things throughout the world. Planning for retirement or already being in retirement has also changed for many Americans. While retirement can be an exciting time, it also brings additional concerns heightened by the pandemic.
In 2020, the Transamerica Center for Retirement Studies surveyed retirees to learn more about their finances during the pandemic and how they prepared for retirement during their working years.
Here are some noteworthy findings:
- Savings: Fifty-six percent of retirees stated that they would depend on their savings if the pandemic took a toll on their finances. Others mentioned they’d rely on credit cards and stimulus money.
- Debt: Forty-five percent of retirees stated that paying off debt is their financial priority. Building an emergency fund and covering living expenses are other priorities.
- Long-Term Care: Twenty-one percent of retirees revealed they don’t have any plans for long-term care. While 41% stated they would rely on their loved ones if their health declines and need help with daily activities, 19% revealed they would move to a nursing home or an assisted living facility, and 17% explained they would use an in-home caregiver.
- Legal Documents: Thirty-two percent of retirees have a healthcare power of attorney. Thirty percent have an advance directive, and 28% have a financial power of attorney.
The pandemic’s economic impact on retirees can teach us several valuable lessons, including:
- Save Consistently: Rather than saving money every once in a while, save consistently. Seventy-eight percent of retirees in the survey reported wishing they would have regularly saved.
- Educate Yourself: Since retirement planning isn’t always part of the school curriculum, we need to educate ourselves. Sixty-six percent of retirees wish they knew more about how to plan for and invest for retirement.
- Avoid Debt: Debt can make it difficult to focus on financial goals like saving for retirement. 48% of retirees disclosed that debt got in the way of their retirement savings plans.
- Start Early: The power of compound interest reinforces just how important it is to save for retirement sooner rather than later. Fifty-three percent believe they waited too long to think about and save for retirement.
- Seek Professional Help: Retirement planning can be complicated, making it essential to work with a financial professional. Thirty-eight percent feel they should’ve worked with a financial professional to plan for their retirement.
Consult Your Financial Professional
Your financial professional can review your unique situation and determine how the pandemic may affect your retirement plans. Additionally, they can provide recommendations to help you save more or recommend other retirement portfolio asset class’s specific to you. Contact us to schedule an appointment with one of our fiduciary advisors today!