While the coronavirus pandemic has put the retirement security of all Americans at risk, there are actions they can take to put themselves in a better position, retirement plan experts say.
Catherine Collinson, chief executive officer and president of the Transamerica Institute, says the first thing people should do is formulate a financial strategy for retirement that takes into account their whole financial picture and all sources of retirement income.
The second thing they should do is ensure they have an emergency savings fund to cover their expenses for six months to a year, Collinson says. Americans seem to be embracing this fact, as a recent survey Transamerica conducted identified emergency savings as the top financial concern of respondents.
“Other things that individuals should be doing, which transcend the current crisis, is to become savvy about finances and saving and investment for retirement,” Collinson says. “Many people don’t know as much as they should about retirement and investment. There is no time like the present to learn.”
Industry authorities agree that understanding even some of the nuances and technical complexities that underpin retirement investing can make a big difference over the long run. Collinson says people don’t need to become experts—but they should be asking good questions and working with someone who is an expert.
“Most are not using a financial adviser,” she says. “It’s an untapped opportunity.”
Chad Parks, founder and chief executive officer of Ubiquity Retirement + Savings, says people should make sure their investments are properly allocated for their age and risk tolerance.
Those who are fortunate enough to still be employed should make additional contributions to their retirement plan, says Kalimah White, vice president at TD Wealth. She agrees with Collinson that people who lack an adviser should use calculators and tools to best figure out a financial plan.
Jeanne Fisher, Certified Financial Planner (CFP) Board ambassador, implores people not to tap into their retirement savings accounts if at all possible.
Fisher worries that the current recession will affect older workers more than their younger counterparts, especially because the coronavirus is more prevalent and deadly among those 65 and older. She says she hopes the government will respond by subsidizing some of the income of older Americans who have lost their jobs.
Harry Dalessio, head of institutional retirement plan services at Prudential Retirement, says he hopes that “as we come out of this crisis, sponsors and advisers will realize that the missing piece for retirement plans is creating a paycheck that will last through people’s retirement.”
As the coronavirus exposed the fact that many people do not have an emergency savings fund, Dalessio says he also hopes that more employers will offer “holistic financial wellness programs—covering budgeting, emergency savings and debt management counseling. All of that needs to come into play for a holistic experience.”