7 Retirement Tips During the COVID-19 Crisis

The COVID-9 crisis is hitting Americans hard. Not only has it battered the stock market, but it's already cost millions of workers their paychecks. But as nerve-wracking as things may be for younger folks, near- and current retirees may be seriously worried right now, and understandably so. If you're in that boat, here are a few tips that will help you navigate these very troubling times.

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If you're planning to retire in the near future, you should know that the more cash reserves you have, the more flexibility you'll have with your investments once your paycheck disappears. And that flexibility could spell the difference between cashing out investments at a loss or not. If your income is still steady, make an effort to sock away enough money in an emergency fund to cover six months of living expenses -- or more.

ALSO READ: Should I Stop Funding My Retirement Savings Because of COVID-19?

With the stock market continuing to tank, you might assume that it's a bad time to pump money into your retirement savings plan. Not so. With investments being cheap, now's actually a good time to fund your IRA or 401(k), so if you're able to keep contributing, do so -- especially given the tax breaks involved.

As retirement nears, it pays to shift toward safer investments that protect you from volatile periods such as the one we're currently experiencing. The precise asset allocation you land on will depend on your tolerance for risk, but as a general rule, if you're already in your 60s with retirement on the horizon, you should have about 50% of your assets in stocks and the remainder in bonds and cash. Specifically, you should have enough of your retirement savings in cash to be able to leave your investments alone for a minimum of a year, so figure out what that percentage looks like for you.

Right now, it's very tempting to cash out stock investments for fear that they'll continue to drop. Don't do it. The stock market has a strong history of recovering from downturns, but if you unload investments at a loss, you'll lock in that loss, thereby guaranteeing yourself less money during your senior years.

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If you're not yet retired but are right on the cusp, now's the time to be flexible. That means not retiring within the next six months if you have the option to keep working. We don't know how long it will take for stock values to come back up, but if you're able to stay in the workforce long enough for that to happen, you'll be in a much stronger financial position once you do retire.

ALSO READ: How to Save More for Retirement Regardless of Income

Near-retirees have different options for riding out the current storm. But what if you're already retired? If that's the case, and you're currently looking at taking serious losses in your IRA or 401(k) by withdrawing money to pay your living expenses, try exploring other options for generating cash. Many seniors, for example, have lots of equity in their homes, so if that's the case for you, try applying for a home equity line of credit. It's a good way to borrow affordably while you aim to leave your portfolio untouched for as long as possible.

Maybe you're used to spending a certain amount of money each month as a retiree. Unfortunately, if your portfolio has taken a beating, that may need to change for at least the time being. Think about the things you spend money on and try cutting back to the greatest extent possible. Right now, seniors are advised not to travel, so rather than put down a deposit on a summertime cruise, leave that money in savings. Similarly, if you're in the habit of shipping your beloved grandkids gifts once a month, put the brakes on those presents while money is tight. You can always revert to your former lifestyle once the current crisis blows over and things begin to return to normal.

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