Bianca FacchineiAs the effects of COVID-19 spread through financial markets, investors are wondering if they should change their strategy — especially when planning for retirement.
“Everyone — all of us that are lucky enough to have a retirement account — has seen it gone down,” said Alicia Munnell, director of the Center for Retirement Research at Boston College.
It's investors nearing retirement age who have a lot to think about as it remains unclear how long the volatility will last and, as a result, how much more money they could lose. It’s an even bigger issue for those who haven’t prepared enough.
“For the number of people that are undersaved — and there’s no shortage of statistics pointing to a decent percentage of people in the U.S. who are undersaved for retirement as they approach it — they’ve had to be a little more aggressive, and that likely means they’ve seen a bigger bite taken out of their current retirement savings,” said Chris Versace, CIO of Tematica Research.
Over one-fifth of Americans have less than $5,000 saved, according to the latest annual survey on retirement from Northwestern Mutual. Coupled with the recent volatility, the lack of sufficient savings could mean some people will have to adjust their retirement goals.
The recent increase in unemployment doesn’t help, either.
“It’s the people who have lost their jobs that I’m particularly concerned about,” Munnell said.
While the market uncertainty has led to losses, the good news is it provides an opportunity for some people to get in at a cheaper price — and possibly grow their retirement funds once a turnaround begins.
“If you’re undersaved and you happen to have excess cash in your bank account — provided that your day-to-day needs are covered — it would be an excellent time to slowly wade back into the marketplace, scooping up a number of quality companies at better prices than we’ve seen in not days or week but months,” Versace said.
