If you have not been financially impacted by the pandemic, it is important to continue saving for your retirement
Mary Lucas //October 13, 2020//
If you have not been financially impacted by the pandemic, it is important to continue saving for your retirement
Mary Lucas //October 13, 2020//
From job layoffs, furloughs and shuttered businesses—the COVID-19 pandemic has undoubtedly impacted our economy, forcing many to make the hard decision about whether or not to dip into their retirement savings to pay the bills and put food on the table. In fact, research from MagnifyMoney found three in 10 Americans withdrew money from their retirement savings and more than half who did used the money to cover daily expenses like groceries and bill payments.
In addition to withdrawing money from their retirement savings accounts, some are decreasing or pausing contributions to them. FinanceBuzz found 27% of Americans have decreased the amount of money they are setting aside for retirement savings or stopped saving for retirement altogether.
It’s important to remember that everyone’s financial situation, retirement timeline and immediate needs are different. However, there are a few alternative loan options to consider before making the decision to withdraw money directly from your retirement accounts.
If you have already withdrawn money from your retirement savings accounts, there are some new relief measures that could help you recover. Under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) the federal government has implemented new tax laws to help ease the burden and limit the penalties for withdrawals as long as you qualify for the exemption.
If you have not been financially impacted by the pandemic, it is important to continue saving for your retirement. Also, make sure you are not missing out on an employer contribution match.
Retirement planning is crucial for everyone’s future and can be a confusing and emotional experience—even when there is not a pandemic impacting the economy. It’s important to work with an advisor who understands your retirement goals and can take the emotion out of making smart financial decisions. Your future self will thank you.
Mary Lucas is the Senior Vice President and Director of Financial Planning at UMB Bank.