It’s no secret that the COVID-19 pandemic has had a major impact on the American economy. Unemployment topped off at an unprecedented 14 percent in March 2020. Fortunately, it bounced back to about a 10 percent national level according to a July 17, 2020, Bureau of Labor Statistics report.
One outcome could be that many Americans who planned to retire this year are considering delaying that decision as the economy remains stuck in recession territory. If the year 2020 was supposed to be when you planned to leave the workforce and begin enjoying retirement, the pandemic was certainly not in those plans.
As incomes have taken a hit because of layoffs, business closings, or slowdowns, some older workers may have been forced to dip into their retirement savings to meet day-to-day living expenses. According to Fox Business, the pandemic has forced many Americans “to put their plans on hold.”
So, where do we go from here? Here are some ideas.
Delaying Retirement Could Be a Smart Move
For the estimated 43% of Americans who plan to delay retirement working past their retirement date could be a smart move.
Here are some reasons why:
- If you still have income, but it has taken a hit during the past months, you can leave your retirement savings stand for a longer period of time and stretch it out.
- Because of the coronavirus stimulus bill, you can tap into your IRA without the 10% early withdrawal penalty. You can use that money to hold you over and weather the storm and replenish it later.
- Your Social Security payments increase for each year you delay taking benefits. For each year you wait, you get an 8% boost, up to age 70.
Delaying Retirement Could Involve Risks
Nevertheless, even if you delay your retirement as a stopgap measure, don’t assume you will be kept on the job indefinitely. Yes, it is technically illegal to discriminate against older employees. However, it happens as older workers are crowded out of the workforce because of budget cuts, etc. Also, older adults, always vulnerable to health problems, face a greater risk now with the COVID-19 pandemic.
So, counting on the shaky assurance that you could work as long as you like, only to be forced into early retirement might result in some major financial sacrifices to meet living expenses in your golden years.
What You Can Do to Prepare for Retirement During the Pandemic
In the meantime, consider tapping into your savings only if absolutely necessary. Can you pick up a side gig and generate some part time income? Get on the web and look around. You might be able to leverage your lifetime of experience and get someone to pay you to bulk up their web content or just do data entry, for example.
Finally, do the math and run the numbers. The answer to knowing what the future holds is the question: Will I have money left over at the end of my life or life left over at the end of my money? You can only answer that question with a budget, an asset inventory, and a reliable retirement income that continues in both sickness and economic health.
