Navigating retirement planning and Social Security rules can be challenging in the best of times. Trying to think about your 401(k) and your benefits during coronavirus can be downright overwhelming. But you are not alone. A recent poll found that despite the ongoing pandemic, Americans are more concerned about their finances than their health right now.
The coronavirus stimulus package currently being discussed in Congress includes provisions that would provide some relief for retirement savings. This includes the ability to take coronavirus-related distributions up to $100,000 from your retirement plan or IRA without a 10% withdrawal penalty. It also suspends 2020 required minimum distributions payments. This means that retirees won’t have to draw down on their savings in the midst of this market turmoil.
While the bill is still being debated, and the arrival date of stimulus checks is unknown, it can feel like things are slipping from control. But there are ways to regain some of that control, and to stay smart with retirement savings during coronavirus.
Reassess your retirement plan
This downturn could impact your retirement plans, particularly if you were planning on retiring in the next year or two. Wherever you are along your path, take this moment to recalibrate your goals, as well as your risk tolerance, to get you back on track for retirement.
You can use a Social Security calculator to help determine the benefits you’re eligible for (you might already be eligible and not know it) and review when you can retire.
Rework your monthly budget
Revise your usual budget around priority expenses to get you through the next few months. If you’re still working and still have your job, think about creating an emergency fund. Yes, if your finances can swing it, you can count streaming video services as a priority. However, if you are ordering takeout regularly by justifying that you would be spending it on restaurants, that might be a place to cut back. Of course, it’s all personal, but take the time to think about the decisions that are right for your own situation.
Contact your lenders or banks to ask for help
If you are unable to make your next payment, contact your bank or lender. A number have offered to allow customers to defer payments, even without interest accruing. Check out this list of banks that are actively responding to the crisis, to learn what steps they’re taking and how they might help you.
Refinance loans as needed
Interest rates today are close to zero. If you still have an income and meet other qualification requirements, refinancing could help you to reduce your loan or mortgage payments in the short-term – and save in the long-term. Platforms like Lending Tree can help you to shop for the lowest refinance rates and help to boost your chances of a refinance approval.
Beware scammers
Hackers are using the hysteria and isolation during coronavirus to prey on people’s finances. Be wary of anyone offering a “safe” or “guaranteed” investment online, or pretending to be the Social Security Administration or the FDIC. Remember that these government agencies will never ask you for personal information like your Social Security number or your bank account information over the phone or by unsolicited mail.
Takeaways
Given the uncertainty today, it’s understandable to feel overwhelmed or have trouble thinking clearly about your investments. That’s why more than ever, it’s important to stay positive and take care of yourself. Frame this time at home as a moment to educate yourself about Social Security benefits and retirement options, and plan for your future, so that you can get your life back on track.