The coronavirus crisis has had a profound impact on Americans' long-term financial outlook. Now, 21% of workers say their confidence in being able to retire comfortably has waned since the pandemic began, reports Transamerica. Given that 52% of workers have experienced job loss, furloughs, reduced pay, or early retirement, that's not shocking. But if you're feeling less secure about your retirement, here are a few steps to take.
1. Recover from 2020
Before you spend too much energy worrying about retirement, first do your best to recover from the events of the past nine months. Figure out how much debt you've had to rack up and map out a plan to pay it off. Assess your job prospects if you're out of work, or concentrate on finding a new position if your pay has been cut and it's not enough to live on. The early part of the year is actually, generally speaking, a good time to find a new job because it's when a lot of companies' budgets renew. Either way, focus on your immediate needs and recovery first so you can approach your retirement planning from a more stable place.
2. Ramp up your retirement plan contributions once you're in better shape
Ideally, you'll recover from 2020 in the course of the next year or two. From there, your goal should be to start pumping as much money into a retirement savings plan as you can. If you still have a ways to go until you're ready to leave the workforce, you may find that knowing you're making steady contributions to an IRA or 401(k) helps shape your outlook for the better.
3. Invest your savings aggressively
Putting money into a retirement plan isn't enough if you want to feel more confident about the future. You'll also need to fuel your savings' growth by investing aggressively. For the most part, that means loading up on stocks, which is a smart bet if you're at least seven to 10 years away from retirement.
Imagine you had to deplete your retirement savings in the course of the pandemic, and at age 40, you're starting from scratch. If you were to put $300 a month into your retirement account for the next 25 years and invest that money at an average annual 7% return, which is a few percentage points below the stock market's average, you'd wind up with an ending balance of about $228,000.
Your financial picture may seem bleak right now in the wake of the coronavirus pandemic, but unless you're truly on the cusp of retirement, there's no need to panic. And even if you are very close to retirement age, there are still steps you can take to salvage the situation. You could try working a few extra years, moving someplace with a cheaper cost of living, or working part-time during the early stages of retirement to generate more income for yourself. If you own a home, you may have even more options, like selling it at a profit, downsizing, and using your remaining cash as income, or renting out a finished basement or garage.
Remember, too, that it's difficult to look past the pandemic because it isn't over. But if vaccines prove effective and things improve in 2021, you may have a very different retirement outlook come this time next year.