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How does COVID-19 change your retirement plan?

COVID-19 has altered life as we know it. The economic challenges it has brought to us means that we have to revisit our finances, including our retirement plan. Below are different scenarios where you may find yourself during the pandemic. 

If you are still working

You should keep your retirement plan if you are one of the lucky people who kept their jobs when the pandemic hit. Those who are employed have a higher chance of saving money, not just for emergencies, but also for long-term retirement. You may even have more savings now than before the pandemic because you may have the option to work from home with less transportation and dining expenses. 

If you still find yourself strapped for cash even with a constant flow of income, your retirement savings should always be the last resort. You should consider tapping your emergency savings or consulting other money lenders in this case.

If you lost your job

Losing your job during the COVID-19 pandemic is not uncommon. Because of the high unemployment rates, many programs are made available by various financial institutions, moneylenders, and philanthropic organizations. You should not stop your retirement plan just because you are unemployed. Instead, you can avail of the programs such as unemployment insurance, waiver of credit card fees, among others.

If you are already retired

If you are in your retirement and feel like your funds are already enough, there is no need to change your retirement plan. What you need to take into consideration are the additional expenses you might incur. For example, you might want to help your children and other family members during this pandemic. This means setting aside extra money for them.

Review asset allocation

This is the time to review where your investment is. The financial crisis has made the economy volatile. It may be best to be conservative in your investment. Another option is to withdraw your existing investments and just safeguard what you have.

Asset allocation can be overwhelming for some. You might want to consult a professional to make sure that you are making the right choices.

Rebuild an emergency fund

An emergency fund saves you from sudden and unexpected shocks that could happen. If you don’t have emergency savings yet, it is best to start as early as possible. You can start small especially if you live paycheck to paycheck. If you have a constant stream of income, you can consider saving money worth three or more months of living expenses.

If you already have an emergency fund, but has something happened which made you tap into it, you should replenish the amount you took. You should also make sure to follow a strict schedule in replenishing money. 

Main takeaways

COVID-19 will inevitably affect our retirement plans. If we do not have to change our personal finances, we might need to help family and friends who are in need. The best way to deal with these financial challenges is to address them head-on. Recalibrate your plan and take into consideration the limitations of this pandemic.