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Ways to Protect Your Retirement in a COVID Environment

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Retirement Planning

July 15, 2020

The coronavirus pandemic has certainly created an emotional roller coaster for many people. From health concerns to unemployment to stock volatility, navigating this type of environment can be challenging. It’s important to focus on what can be controlled.

Here are some tips to take into consideration during the COVID environment to ensure that such unpredictable, life altering events do not steer you off course so far that they change your future.

Revisit your long-term retirement plan.

With the environment uncertain, it can be tempting to want to move around your investments or even store your cash under your bed. However, instead of taking hasty steps, revisit your overall long-term strategy. There may have been a significant life event such as a death, divorce or job loss, so it is important to make adjustments to accommodate any life changes. Your financial advisor can provide guidance that will help ensure your goals align with your long-term retirement plan and keep you on track to reach them.

Save your cash.

As COVID-19 continues to take its toll on the economy, it has also provided a significant opportunity to evaluate spending and saving. Expenses that may have been considered essential, like fine dining on special occasions or summer weekend escapes, have likely moved to the wish list because of the current environment. There are many opportunities to reprioritize and cut back on spending, not only temporarily, but permanently.

According to Bankrate, over 52 percent of U.S. adults reportedly have cut back on spending in the COVID environment. Only spending on necessary items can help to shift additional money into your retirement savings, benefiting you many times over again when you reach retirement. Additionally, uncertainty makes it more important than ever to have a decent cash cushion.

Review insurance coverage.

Health challenges can become a reality very quickly, so having the right insurance in place in advance is a critical step in a long-term plan. Checking items such as coverage, deductibles and beneficiaries on policies are important steps so that contingency plans can be made if needed. Having policy numbers and provider names in a convenient place may sound simple, but this can be a significant help in the event the information is needed by you or your family members so your wishes can be supported.

Maximize employer benefits.

If you’re still employed, there is overall less job security during a pandemic. It is a good opportunity to consult a human resources person at your company to gather information about your health insurance and savings plans. Make sure to take full advantage of employer matching contributions in your 401k and try to avoid taking hardship withdrawals. Fully understand your health benefits and other available benefits that you may not be maximizing, such as additional insurance or discounts. If you have lost your job, you may be able to keep your employer health plan for up to three years and potentially use your health savings account funds to pay for COBRA premiums or other medical services.

Consider refinancing your home loan.

Mortgage rates are lower than they have been in 50 years. It could be an opportune time to consider refinancing your mortgage to take advantage of low rates. This could lower monthly payments and potentially save thousands over time by making your rate and payment lower, especially if you are planning to be in the home for a longer period of time. Refinancing may not be the best option for everyone given the many factors to consider, but the chance to get a lower rate has never been better.

Give to those in need.

While everyone may not be in a position to give during the COVID environment, those that are should consider giving to charity or making a donation. Donating not only helps those in need, but it feels great to give and has benefits as well. The U.S. government is encouraging charitable giving with two CARES Act provisions, including the ability to deduct $300 of cash contributions made to charitable organizations this year, whether you itemize or not, and the possibility of reducing your tax bill to zero if you donate to a public charity a cash amount that equals your 2020 adjusted gross income.

Having a holistic plan in place to reach your retirement goals is more important now than ever, given the uncertainty of the COVID environment. If you already have a plan, it is a good idea to revisit it to address recent market or life changes, and to ensure you are prepared for uncertainty. Your retirement timeline and lifestyle depend upon making smart decisions now when it comes to investments, insurance, benefits and saving cash.

If you are concerned about how recent market and economic changes may have an influence on your retirement goals, contact Bayntree Wealth Advisors at info@bayntree.com or schedule an appointment to ensure you have the right strategies in place to reach the retirement you desire.

‍Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.

Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.

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