The current outbreak not only has impacted our health, but also our finances. The Bankers Life Center for Secure Retirement conducted a study and found that 54% of working adults say their retirement planning has taken a hit amid COVID-19. Losing money in the stock market (36%) and being forced to prioritize short-term savings (36%) were marked as areas of top concern for those whose retirement has been impacted.
It’s unclear how long it may take for families to fully recover from the economic impact, but from experience with past economic crises, there are a few steps you can take today to potentially restore your financial wellbeing faster.
Here are five steps to help you recover from financial loss:
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Take a deep breath and stay calm.
The future of your retirement investments depends on what you do today. Stay calm and avoid making moves based on emotion. Trust your financial representative’s advice to keep your money invested, resist the urge to sell in panic, and weather the market volatility.
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Put your stimulus check to good use.
If you received a stimulus check, prioritize paying bills that are immediately due to avoid late fees, which can detrimentally impact your credit score. Check with your service providers, as some are offering temporary, penalty-free payment deferral, which could help you determine where and how to spend your stimulus money
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Repay your retirement accounts.
If you need to take money from your 401(k) to make ends meet, many financial representatives suggest you take out a loan rather than a withdrawal. Your employer is responsible for providing you withdrawal and repayment details. The IRS requires 401(k) loans to be repaid within five years, with at least quarterly payments toward the interest and principal.*
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Consider refinancing.
If you have a mortgage, student loans, credit card debt or a personal loan, you might consider refinancing your loans to take advantage of low-interest rates and lower your monthly payments. You’ll need to first complete an application and get a rate quote. Carefully consider the benefits of refinancing against any setbacks, and ensure the math works in your favor.
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Prepare for next time.
The full economic impact of COVID-19 won’t be known for some time, but this won’t be the last financial crisis we’ll face. As you take steps to recover, it’s important to protect your finances for tomorrow. Start setting aside money in an emergency fund. Financial representatives recommend at least three to six months’ worth of living expenses. Review your investment portfolio with your financial representative to make sure it’s still on course to meet your financial goals and to see if your portfolio is diversified enough to weather future uncertainty.
We’re here to help
Recovering from the economic impact of COVID-19 will take time. Starting today will help you get back on track and prepare for the next financial crisis. Speak with your Bankers Life financial representative to learn more ways to recover, see if your portfolio is working for you, and make sure you’re on track to reach your retirement financial goals.
*IRS, Retirement topics – plan loans, https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans, May 2020.
