Though 2020 wound up being a strong year for the stock market and a lot of retirement plan balances grew during that time, many people faced setbacks on the road to planning for their senior years. In fact, 82% of Americans say their retirement plans have been impacted negatively by the pandemic, according to a recent Fidelity survey. If you fall into that category, here are a few things you can do to get yourself back on track.
1. Bank any windfalls you receive
You may have already gotten a $1,400 stimulus check as part of the recently signed $1.9 trillion coronavirus relief bill. If you don't need that money to pay for essentials and are all set on emergency savings, put that cash into your retirement plan. In fact, if you didn't max out your 2020 IRA, you still have time to finish funding that account, so you might as well contribute toward your 2020 total and then start or keep working on 2021.
Similarly, it's tax-filing season, and you may have a refund coming your way. If so, you can use it to fund an IRA or otherwise increase your 401(k) contributions for the year.
2. Spend a little more mindfully
A lot of people had to change their spending habits during the pandemic, but hopefully, your routine will start to get back to normal this year as more people get vaccinated. Once that happens, you may need to rework your budget and make an effort to cut back on discretionary spending to free up more money for your retirement plan. Think about how to do that now, before your expenses start to change.
3. Boost your income with a side job
A lot of people's income took a hit during the pandemic, and if you're still earning a lower wage, your options for funding a retirement plan may be limited. But if you pick up a side gig, you can boost your earnings and put your proceeds into your IRA or 401(k).
Many states are already lifting pandemic-related restrictions, and in the coming months, more jobs could open up, giving you the opportunity to apply for some part-time work. Or, you could try finding a gig you can do on your own terms, like driving for a rideshare company.
4. Make sure you're invested appropriately
If your retirement plans took a hit last year, a good way to compensate is to invest your savings as strategically as possible. Take a look at your IRA or 401(k). Is it invested aggressively enough given your age? If you're 10 years away from retirement or more, now's the time to go heavy on stocks for maximum growth.
At the same time, make sure you're not paying too many needless investment fees, as those can eat away at your returns. If you have a 401(k), it often pays to favor index funds over actively managed mutual funds. With the former, your fees will be significantly lower, but you may not lose out on high returns. Quite the contrary -- index funds often outperform their actively managed counterparts.
Maybe you had to pause your retirement plan contributions last year because you lost your job, your hours were cut, or you incurred added expenses, like more child care costs. If that's the case, now's your chance to overcome that setback and get yourself caught up. The right strategy could put you back on the path toward retirement security -- a goal the pandemic shouldn't stop you from achieving.