If you’re like most people, you are somewhat, if not entirely, burned out on the whole coronavirus situation.
It’s understandable given the tsunami of confusing information directed at us over the past few weeks.
However, I advise you not to allow burnout to keep you from taking a closer look at how your finances fared during the pandemic. You need to look for weaknesses in your current money strategy and discover ways to eliminate those weak links. If you’re like most people, isolation, self-quarantine, and time off work gave you time to think about what matters most to you. You may have discovered how important it is to have contingency plans in place when disasters and economic downturns arrive.
You probably also concluded that having reliable streams of income is essential, whether it’s to keep you afloat during a pandemic or to ensure that you have a retirement that is less stressful and more enjoyable. While we don’t know precisely what the world after COVID-19 will look like, most experts agree that it will be radically different in several key ways. If you want to survive financially, with your retirement blueprint intact, then you need to know what experts are saying about the new normal.
Researchers recently surveyed a cross-section of working Americans to discover how the pandemic has altered their financial situations and shifted their areas of concern.
According to the survey, the use of savings as a backstop against the economic hardships created by job loss was a common occurrence. 63% of respondents surveyed worried about having to dip into this pot of cash and eventually running out of money later. Directly related to that loss of savings is, of course, the real fear of not having enough money in retirement. 30% of respondents also indicated that their stimulus checks, designed to help reboot the economy, are either being saved or used for necessary living expenses such as food. Few people are using them to buy consumer goods beyond those required for survival.
This means that the $1,200 stimulus checks received by most Americans will have a negligible impact on the economy as a whole. It seems as if we won’t be able to cure the effects of the coming recession by throwing money at it as we have done during past financial crises. That will make for a long road to full recovery.
So, what HAS the coronavirus taught us as far financial lessons are concerned?
Well, for one thing, it has hammered home the need to be prepared for health issues that will arise now and in the future. Coronavirus shone a spotlight on our fragmented and weak medical system and the high costs associated with long term illnesses. More people than ever have started asking questions about how they can protect their retirement cash and assets against the economic devastation of chronic or life-threatening diseases, accidents, or injuries.
Another thing, as I mentioned previously, is that many people have begun to understand how vital income planning is. People who plan to retire or downsize their lives within the next five years MUST have streams of income in place.
Often, the advisor who helped a person during the accumulation phase of their financial life is not qualified to set up this kind of income plan. The reason for this is that a typical financial advisor doesn’t have enough specialized knowledge about safe money products. Such knowledge is necessary for helping clients make the right choices to create lifetime income. When you are putting together an income plan, be sure to seek the advice of a qualified safe money expert who understands the right way to use products such as annuities, life insurance, and other risk-averse products.
Finally, coronavirus has revealed the debt monster.
People who have been laid off or have lost their businesses are learning some painful lessons about how much despair and anxiety debt can create. Many of us now question our decisions to purchase new cars, homes, and high-ticket items. We may wonder if the loan taken out for Jr’s college was worth the problems we are now experiencing.
I predict that in the future, people will be a lot more careful about how they spend their money and will better understand the concepts of compounding, inflation, and lost opportunity costs. While it may take some time and will undoubtedly be painful at first, I believe that our nation will be able to move past the pandemic and achieve some measure of economic recovery. It could take years, though, so we need to prepare mentally, financially, and physically for what lies ahead.
We will want to look at our finances in an entirely different way, realizing how much thoughtful, data-driven planning can help us overcome setbacks. We will also need to reformulate our current income and retirement plans to include new realities brought about by the pandemic.
It will not be impossible to accumulate wealth or retire after coronavirus.
Still, it will require us to take a fresh approach to how we view finances and to partner with advisors who have our best interests in mind.
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