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How to Stop COVID-19 from Wreaking Havoc on Your Retirement Plan

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The Society of Actuaries recently launched an online conversation about the impact of COVID-19 on retirement risks. To facilitate the conversation, the SOA utilized the listserv it maintains for its Committee on Post-Retirement Needs and Risks, and Aging and Retirement Strategic Research Program.

And this week it published a brief - Impact of COVID-19 on Retirement Risks - that summarizes the thoughts and questions raised during the conversation about the potential impact of COVID-19 on retirement risks and planning.

What did the brief reveal? What can you do right now with your personal finances?

According to Anna Rappaport, the co-author of the brief, there are several steps to take, and not take. Employees, for instance, should consult with their employee benefits department and take full advantage of any guidance and counsel there. Many firms offer financial wellness programs, employee assistance programs, and other trustworthy resources.

The coronavirus pandemic highlighted the fact that many Americans had virtually no emergency funds and were managing paycheck to paycheck. This crisis serves to remind us all of the importance of having money set aside for emergencies.

According to the report, the importance of housing wealth in retirement portfolios will likely increase for many people. Some might consider refinancing their mortgage while others might consider a reverse mortgage.

There is, according to the report, significant concern about an overload of information—much of it contradictory—and general misinformation. And this, the report notes, can lead to decision-making paralysis and confusion. What’s more, fraud has also become a major concern, with many scammers taking advantage of the crisis.

Loss of income through job loss or reduction of hours may push people into claiming Social Security earlier. That, however, could be a mistake according to Rappaport, who notes that the monthly benefit difference between claiming at age 62 versus 70 is quite large. Read Early or Late Retirement.

What’s more, the COVID-19 pandemic has raised questions and concerns about assisted living facilities, nursing homes, and the like. Now would be a good time to re-evaluate what sort of changes need to be implemented.

To be sure, the impact of COVID-19 on retirement risks promises to be evolving and riddled with uncertainty over the coming months and perhaps years. But that doesn’t mean you have to lose control of your retirement plan.

For an in-depth interview with Anna Rappaport on this subject, listen to the Retirement Daily Podcast

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