Has COVID-19 Changed Your Retirement Plans?
The Coronavirus pandemic has changed the way many of us live, how we interact with people and the way some of “go to work.” With that in mind, there’s a good chance it has changed your retirement as well.
If you once dreamed of traveling the world in retirement, relocating in your Golden Years or even spending time with family and friends when work was no longer a factor, is that still the case? Are those still reasonable plans? Have your finances, travel restrictions or even an area’s vulnerability changed your mind? These are important questions to ask, because when your plans for retirement change, your budget and finances can also change.
For some, COVID-19 caused financial setbacks, business closures or lost jobs. Did you decide to retire early? Are you now looking at a later retirement date? What can you do now to get back on track?
At Foran Financial Group, we’ve helped many clients answer these tough questions and either find strategies that pursue their original goals or support new ones. In this process, there are 5 things to consider.
Have you reviewed your retirement plans this year? Schedule a no-strings-attached conversation with the team at Foran Financial Group.
How did you plan to spend your days in retirement? Will your health and finances still allow you travel, visit with family or volunteer? Is starting your own business still an option?
Where did you plan to live? Are you still able to downsize, relocate, move in with family or to a senior living facility?
Who did you plan to spend your time with in retirement? Is that still possible?
What will give you purpose?
Contemplating how to spend your newfound free time may feel like the fun part of retirement planning, but establishing what lifestyle you want to live is actually the foundation for your financial plan. How much will your retirement lifestyle cost? Do you have enough money to live the life you hope to live?
If your plans have changed even slightly, let’s talk! You don’t want to save for a retirement you no longer want to live!
While they may be related, your plans for retirement are different than your goals.
For example, your plans for retirement may include spending time with your grandkids, traveling, downsizing or moving across the country. Your goals may be to pay for your children’s college tuition, help the next generation buy their first home or support a charity you care deeply about.
Like your plans, your goals can affect your retirement budget. Has COVID-19 changed any of that? Are your kids still going away to college? Did your adult children move back home instead of out on their own? Discuss your goals as well as your plans with your financial advisor.
Say your day-to-day plans didn’t change. Neither did your goals. Did your budget? If you retired early, took Social Security benefits earlier than expected, withdrew money from your retirement plans to make ends meet in 2020 or took on more debt to help care for aging parents, adult children who moved back home or new medical bills, it may have!
In your new situation, are you able to stretch your budget for any extra years you may need to cover? Do you still have enough to address inflation? Is your original withdrawal plan still appropriate?
At Foran Financial Group, our team of financial advisors in New Jersey can run different scenarios and help you understand what different decisions mean for your bottom line. Our financial advisors can also suggest strategies you may not have thought of on your own. For example, could you benefit from a Roth IRA conversion?
Your Income and Debt
How would your retirement income change? Well, for starters, if you decided to take your Social Security benefits earlier than expected, the amount you receive on a monthly basis would have changed. An early retirement may also make healthcare a new concern if you’re not yet eligible for Medicare, and healthcare can be expensive.
If you retired earlier than expected, were you fully vested in your pension or retirement plans? Will you face penalties and taxes for early withdrawals?
If you’re a business owner, and your retirement involved proceeds from the sale of your business, does the market support the price you had hoped to get?
Debt also affects your budget. Will your mortgage be paid off? Did you have to take on new debt to carry you through 2020?
Read our recent blog post: How to Find ‘New Money’ in Your Budget (Financial Advisor in Jersey Shares 7 Tips).
While the pandemic caused many people to retire early, others have decided to work longer. Do you know your options?
Is working part-time a viable option? Can you consult, work remotely, change roles at your current job? If taking on a new job, do you have access to company-sponsored retirement plans? Healthcare? Other benefits?
Working longer can obviously provide many financial benefits, but it can also have negative effects on your Social Security benefits, if you’ve already started receiving them. Before assuming that working longer is your best option, discuss your plans with a financial advisor.
If Nothing Changed, a Review Can Still Be Helpful
If you were lucky enough to come out of the pandemic unscathed, at least for the most part, a financial review can still be a wise move.
While COVID-19 may not have touched your finances or employment status, it may have affected your outlook on life, your work environment, and therefore, expenses, or possibly even your family makeup. Major transitions like divorce, a growing family or the loss of a loved one can change your financial life dramatically.
Schedule a complimentary conversation with the team at Foran Financial Group and find out where you stand. If everything remained status quo, what’s the harm in checking? You may be surprised at the confidence that comes with getting a second, professional opinion.
The financial professionals associated with Foran Financial Group may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.