The global COVID-19 outbreak continues to grow, and health officials are increasingly worried that the outbreak will become a full-blown pandemic. Financial markets have reacted negatively to news of the spread of the disease. Many worry about the impact on the global economy, and already, key industries like travel and entertainment have felt the brunt of measures to fight the disease.
For retirees, the disruptions associated with the coronavirus could be especially troublesome, given a lack of income and the heightened healthcare needs that many older Americans have. To keep yourself prepared for whatever may come, it's important for every retiree to take a couple of steps to get ready to deal with the potential consequences if the outbreak reaches greater proportions.
1. Raise enough cash to get through a crisis, if you can
Many retirees are only able to make ends meet by living from Social Security check to Social Security check, so the prospects of saving cash can be difficult if not impossible. However, even for those who struggle on a fixed income, doing what you can to set a little something aside could prove extremely valuable if coronavirus disruptions start to have more dramatic impacts on the financial system.
For those who've managed to accumulate a retirement nest egg, setting aside cash is a more realistic goal. In order to weather potential stock market downturns, many retirees find it helpful to have two or three years' worth of living expenses available in liquid investments, such as savings accounts or money market funds. That way, if the rest of your investment portfolio loses even more value than it already has, you won't feel compelled to sell right away and will have a better chance of being able to wait out the downturn. Although some investment professionals believe that a V-shaped recovery in the stock market is likely once the full extent of the coronavirus outbreak becomes clearer, counting on that bounce happening quickly could cost you a lot of money if you're wrong.
2. Make sure you understand your healthcare coverage
Retirees can have a hard time understanding exactly what kind of healthcare coverage they have. For most people 65 or older, Medicare provides basic coverage that pays for the majority of your medical expenses. However, Medicare doesn't pay for everything, and many retirees don't find out until it's too late that they haven't made any provisions to cover the portions of their healthcare expenses that Medicare won't pay.
Medicare Supplement Insurance, also known as Medigap, is generally available to those who want to get additional coverage above and beyond what traditional Medicare offers. However, the insurance companies that offer Medigap coverage are generally allowed to use medical underwriting practices to determine whether they want to accept applications for Medigap insurance, and if you have health problems, that can be problematic. When you first become eligible for Medicare, you have a six-month Medigap open enrollment period during which you're allowed to buy any Medigap policy regardless of health condition. After that, though, you could end up paying more or even being denied entirely if your health is poor.
Alternatively, using a Medicare Advantage plan, rather than traditional Medicare, can get you additional coverage under certain circumstances. Medicare Advantage plans must offer at least basic minimum healthcare coverage, but they have the option of going beyond those minimums to provide better coverage in chosen areas. However, with the annual enrollment period for choosing Medicare Advantage running from Oct. 15 to Dec. 7, you've already missed your chance to make a switch for the 2020 policy year -- so your best option is simply to find out what your current coverage is and make the best plans you can, while looking at possible changes you can make for 2021.
The coronavirus outbreak is a scary thing, but there are things you can do to protect yourself. By taking steps to make a solid retirement financial plan, you'll be in the best position possible to weather the storm.