Like every other aspect of the economic landscape, COVID-19 has prompted millions of people to take a second look at their retirement strategies.
Many people have opted to retire early. They have accepted the challenge of living on less than previously planned for those coming Golden Years. That, in turn, has prompted millions of retirees to seek additional income streams.
For others, the changes wrought by COVID mean a review is in order of their pre-pandemic retirement investment strategies. For those still working but nearing retirement, now is the time to review your plan.
Make an appointment with your financial advisor if you have one. Talk to him or her about whether your current plan still makes sense.
Speaking of financial advisors, the majority say that those who are lucky enough to be ahead with their retirement plans may benefit significantly from early retirement.
For those who are behind, a primary suggestion is to redouble efforts to save more aggressively, look for new potentially lucrative investments and cut expenses to free up cash.
The current state of the retirement scenario suggests that tax-advantaged plans are the best tools for the times. It is important to note that contribution limits for workplace retirement plans have been increased for 2022. Now you can contribute up to $20,500 to a 401(k). Last year the limit was $19,500.
Whatever the case, people aged 50 or over should consider getting as close as they can to making that maximum contribution to a 401(K).
This is also a suitable time to be proactive in dealing with the debt you may be carrying. In many respects, debt is a modern form of slavery. Anyone who expects to retire when they want to quit working will find it exponentially more difficult to do so with debt to service. The closer you get to retirement, the more critical it becomes to reduce debt to zero if possible.
Easier said than done, to be sure. However, take heart that millions of people accomplish just that. It takes discipline and an eye on the future. Suck up the pain now to eliminate debt and have a lot less pain later.
Another terrific idea is to create an HSA if you have not already done so. What’s that? It’s a Healthcare Savings Account. Remember that Medicare covers 80% of your medical bills while you still pay 20%. That latter portion can add up to a lot. If you take the time now to build up an HSA, you’re going to have a much easier time when it’s time to retire.