COLORADO SPRINGS — As our state works to rebound, the coronavirus pandemic continues to present lasting challenges for our families. Some of those challenges include the financial stress impacting retirement decisions. A local couple talks about their experience and experts share advice.
A recent study found one in four workers say right now they're worried about being able to retire. It's something people spend their entire careers planning for, but the impact of the coronavirus on the economy has made these decisions much more stressful.
"It has been stressful and it's dominated a lot of our conversations," said El Paso County resident Matt Hornung.
Matt and his wife Eva are on the verge of retirement, but the financial impact of the coronavirus has made an already difficult decision for their family even harder.
"It's definitely stressful you know? I mean one, do we have enough money to pay for the college? Do we have enough to do the things we thought we wanted to do?," said Eva. "If I was going to work another four years then yeah we definitely would have the money to travel and do all that. If I retire now do we give some of that up? And is it worth it?"
For now, their retirement plans are in limbo. Working in real estate Matt says the coronavirus and lockdowns brought-on unexpected challenges.
"I hardly made any money in May and the phone was not ringing," Matt said. "So that's kind of what we're working through. For me I'm concerned about this whole year. It would be hard for this to rebound enough to have this be a normal year."
The Hornungs aren't alone in these concerns. Financial experts fear in this uncertain financial climate people getting ready to retire may panic and make lasting financial mistakes.
"My worries are actually more than anything else people doing something on the spur of the moment without really thinking about it. panic selling, sudden financial moves things along that line," said AARP Senior Policy Advisor David John.
Here is some of the advice financial experts are giving from coast to coast when it comes to managing retirement plans:
- If you can, don't change your 401k contributions
- Continue paying down debt
- Budget to boost emergency savings
- Consult a financial advisor
- Know your comfort level for risk
"Stop. Think. Sleep on it. Sleep on it again," said John.
If you do decide to take action, Retirement Advisor Celine Pastore suggests dividing your money into separate buckets to protect your finances.
"You don't want to have all your money taking the same amount of risk," said Pastore.
Pastore advises her clients to divide retirement savings into three separate categories:
- Put one year of income in a money market account or an interest-bearing cash fund, so you don't have to raid retirement accounts if stocks turn volatile
- Invest a portion of your assets in moderate-risk funds you won't need to touch for the next 2 to 5 years
- Keep the rest in long-term investments with a higher risk tolerance
"The number one thing i see with those who are successful in retirement and those who are not as successful is they spend less than they make. They are very good at saving," said Pastore.
For anyone looking at retirement or thinking about retiring early figuring out the cost of a healthcare plan is also a huge factor.
It's a good idea to have a financial game plan with or without the rollercoaster economy.
Here is a tool provided by AARP to help you evaluate your finances:
https://www.aarp.org/work/retirement-planning/retirement_calculator.html
