For many Americans, COVID-19 hasn't just affected their current financial situation -- it's made them less sure about their future as well. In fact, research from the Transamerica Center for Retirement Studies revealed that 23% of workers are less confident about their retirement prospects than they were before the pandemic happened. Breaking down that total generationally, it includes 20% of millennials, 25% of Gen Xers, and 32% of baby boomers.
It's not surprising the novel coronavirus has caused retirement readiness to take a hit, as millions of Americans have found themselves facing unemployment or a reduction in their investment account balances. But the virus doesn't have to doom you to disaster in your retirement years. In fact, there are three simple steps you can take today to restore your confidence and get back on track.
1. Review your situation
The first step in getting your confidence back is determining why you lost it in the first place. And that means taking stock of the factors affecting your retirement readiness. This may include unemployment, an income cut, stock market losses, or simply the fact that the country has officially entered a recession.
Once you know what's holding you back, you can make a plan to overcome it. If you're unemployed, for example, applying for expanded unemployment benefits and allocating some of that money to retirement savings could put your mind at ease.
2. Increase the amount you're investing
Whether you've lost some money in the stock market, you've paused retirement investing due to unemployment, or you're simply worried about the state of the economy, there's a simple cure for that: Invest more.
The more you invest and the sooner you put your money into the market, the easier it is to build a diversified portfolio, and the better your chances of earning the kinds of returns you need for a big nest egg.
Don't be worried about investing during a volatile market, either. As long as you're a long-term investor, you purchase a mix of different assets, and you do the work to pick strong companies or low-fee index funds, you should make money over the years even if your timing isn't great.
3. Make sure you've got the right asset allocation
Although getting your money into the market is the best way to build a big retirement nest egg, you do want to be exposed to the right level of risk based on your age.
Having too much invested when you're older and don't have time to wait out market downturns can be risky, as can being too conservative with your investments when you're young because you may not be able to earn the returns you need.
Most experts suggest subtracting your age from 110 and investing that percent of your portfolio in the market. If you follow this approach, you should be in good shape. But if you find that you've got too much or too little invested, shifting around some of your money should help alleviate your worries.
Don't let the virus hurt your retirement plans
If you're among the millions of Americans whose retirement confidence has taken a hit due to coronavirus, taking these steps can help you turn things around. You shouldn't have to suffer in your later years because of a global pandemic today, so take action ASAP to feel good about your retirement plans again.