Like a lot of things, the COVID-19 pandemic has changed the way many people think about money, savings and retirement. At PAX Financial Group, we’ve seen this firsthand.
Depending on their experiences, we’ve talked with a lot of people who want to know how they can save more to ensure they can retire well in the future, how they can contribute more to their 401(k) accounts and how they can invest outside their employer-sponsored retirement plans.
If you’re unsure about what retirement looks like for you post-pandemic, below are 7 retirement strategies to consider:
1. Contribute More
Are you contributing the maximum amount to your retirement accounts? Remember, if you recently turned 50, you can now take advantage of catch-up contributions! Also, if your employer offers a contribution match to your 401(k), not taking full advantage is essentially leaving money on the table.
A lot of people paused their retirement contributions during the height of COVID-19 to make ends meet during tough times, be it due to business shutdowns, a job change or family members moving back home. However, if your situation has changed, make sure these temporary breaks don’t become permanent. If you’re not ready to return to “normal,” start by making small contributions each month until you’re fully back on track.
If you need to adjust your retirement strategy due to your “new normal,” talk to a financial advisor. Review your plans, your goals and any new financial obligations.
Let’s talk! Schedule a no-strings-attached conversation with PAX Financial Group to see how we can help.
2. Invest in Multiple Plans – Not Just Your 401(k)
Spreading your investments out over more than one type of retirement account can be a wise strategy for many reasons. For example, contributing to a Roth IRA and a Traditional IRA can equate to tax benefits both today and in the future.
The advantages of having retirement savings outside of your 401(k) can also include higher maximum contribution limits, lower risk and increased growth potential.
3. Retire Later
According to recent data, only 33 percent of pre-retirees plan to retire as they did before the pandemic. The other 67 percent plan to retire earlier or later than originally planned.
When it comes to setting your retirement date, make sure you’ll be emotionally and financially ready. If COVID-19 has upended your financial situation or made you reassess your plans, you may need to take another route.
If you’re not sure how to retire well post-pandemic, talk to a financial advisor. This is one decision you won’t want to make without examining it from every angle. Financial surprises in retirement can be uncomfortable and stressful. Read our recent blog post: 6 Ways Retirement Can Surprise You.
4. Postpone Social Security Benefits
When you start to claim Social Security benefits is a personal decision, so if your situation has changed in any way, you may want to consider delaying taking your benefits or taking them earlier than originally planned.
As of 2021, in most situations, you are eligible to begin collecting Social Security benefits as early as age 62. But you don’t have to. If you were born after 1959, your full retirement age is 67. If you begin collecting benefits at age 62, you will receive 30 percent less than if you’d waited to start collecting until age 67. If you wait until you turn age 70, the amount you receive will increase by 8 percent every year you delayed.
Determining the right time to start taking Social Security benefits is about more than just the amount you receive though. Talk to a financial advisor about your age, life expectancy and other retirement income sources to determine what makes the most sense for your specific situation.
5. Revisit Your Needs, Wants and Debt
For a lot of people, COVID-19 gave them time to reflect and take stock of their situation, their life as a whole, and what they really need to get by.
Re-evaluate your budget and expenditures, needs and wants. Revisit your debt – in some cases, reducing debt can be just as important as saving for retirement, if not more-so, because having high-interest debt, like credit cards, can limit your ability to save for retirement. Talk to a financial advisor about how to unload your debt baggage and where you can redirect the money to get the most bang for your buck.
6. Revisit Your Plans
While it’s important to review your financial plan, it’s also crucial to review your day-to-day plans for retirement, especially after an event with such far-reaching impacts as the pandemic.
- What’s your retirement personality and what does it mean for your finances?
- Are you still able to visit family in retirement?
- Is traveling still an interest of yours?
- Did your children relocate, and now you plan to follow?
- Did retirement come earlier than expected?
- Are your beneficiaries up-to-date?
- Do your estate plans still make sense?
Talk to a financial advisor to see if you need to rebalance your assets. If you pulled from a retirement account early, make sure you understand how it will affect your target retirement date and future plans.
7. Work with a Financial Advisor
From health scares to job insecurity; market volatility to changes in your values, you may not be the same person you were just a few years ago. With that in mind, there’s no better time than now to get a second opinion on your retirement plans. Adjusting to life post-pandemic can be hard enough. Don’t add financial uncertainty to your list of things to figure out on your own.
At PAX Financial Group, our team of financial advisors are here to help. Whatever your life looks like in retirement, our goal is to help you retire well and live the retirement dream you have in mind. Locally owned and independent, our team offers holistic financial assessments, investment management and insurance all in one place. Don’t wait. Schedule a conversation today.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.