The uncertain times brought on by the coronavirus pandemic and the resulting economic downturn have made many of us turn our attention (and worry) towards our finances. Before the pandemic, we may have felt confident in our financial well-being and our ability to retire one day.
Retirement is a milestone everyone dreams of, but it’s a privilege often only afforded to those with the financial means to do so. With the recent economic downturn, studies find that it may be a smaller number of Americans. Conversely, the pandemic may also result in more Americans forced into early retirement who did not want to or are not financially comfortable to do so.
And what about those who have just entered the workforce or veteran workers who plan to retire within the next ten years? What are their outlooks for financial stability and saving for retirement?
Thanks to COVID-19, every segment of American working-class citizens have seen (or can expect to see) a shift in their retirement outlook. Not only has the pandemic made finances tiger and less stable than before, but there has also long been talk about raising the full retirement age as a part of Social Security reform.
All in all, you should plan for your retirement plans not to go as expected, whether that means receiving benefits later than you planned for or being forced to retire sooner than expected. Younger and older citizens alike would be wise to educate themselves and plan accordingly.
Keep reading to learn more about potential changes to the official retirement age, post-retirement risks to know and plan for, and how to prepare for retirement today, no matter your age.
COVID & Retirement Outlooks
Though retirement planning is a pertinent concern for all who plan to retire one day, it is a significant concern for those who planned to retire soon in 2020. The coronavirus made finances tight and job security much less secure.
Many who did not plan to retire for years have been thrown into an early retirement thanks to pandemic-related layoffs and a tough job market. If they haven’t saved up enough to support their own retirement and don’t yet meet the minimum age to qualify for Social Security benefits, they may find themselves in a very tough spot.
The Society of Actuaries (SOA) has outlined four primary categories of post-retirement risks to be aware of and plan for:
- Personal/family: lack of employment, living longer than financially planned for, unexpected family death, divorce
- Healthcare and housing: unforeseen medical expenses, moving
- Financial: inflation, interest rates, stock market, or business changes
- Public policy: increased taxes, benefits reductions, changes in qualifications for benefits
Preparing for Retirement Today
The best way you can plan for retirement today is to start building an emergency fund or stream of income you can carry with you into retirement. That way, should your Social Security benefits be delayed or insufficient, or should an unforeseen risk (such as those listed above) occur, you will be protected.
All in all, even the most-prepared future retirees can be caught off-guard by a sudden change (as we’ve seen this year). Don’t let that discourage you from doing everything in your power to prepare financially for the comfortable retirement years you deserve.