Saving for retirement can be a daunting task under the best of circumstances, but the coronavirus outbreak has thrown those near retirement an added curveball.
And now, as states begin to reopen, people may begin to assess what the pandemic has meant for their retirement.
Michelle Singletary, a personal finance columnist for The Washington Post, writes that now is a good time to revisit the conventional wisdom associated with retirement.
"With the coronavirus pandemic throwing tens of millions of Americans out of work and causing extraordinary stock market volatility, it's time to give a makeover to some retirement rules of thumb," Singletary wrote in the Post.
As you begin to look at your savings and plans for retirement, here are some things to consider.
Focus on debt:
Singletary wrote in the Post that it may be more important now to focus on paying off debts than saving every penny possible for retirement.
Especially for people who are further away from retirement. Long-term, high-interest debts can hang over your head for decades.
“The longer you wait to get rid of debt, the more likely it will hinder your retirement savings goal,” Singletary writes.
Don’t underestimate the cost of retirement:
With the average lifespans longer than they were in previous generations, it has changed the way Americans think about retirement. It's not uncommon for people to have retirements that last two or more decades, which can be a daunting task to save for.
"The big risk is outliving your money," Keith Bernhardt, vice president of retirement income for Fidelity Investments, told U.S. News and World Report.
A recent report from GOBankingRates found that having a comfortable 20-year retirement in Georgia costs more than $1 million or roughly $56,000 annually.
While conventional knowledge has said Americans should save as much as 10% of your income for retirement, experts agree that it may not be enough. In a post-pandemic world, that number will likely look more like 15%.
"I can imagine some people, early on in their career, who might see that number and get a little scared. But we do like to remind people that the percentage includes any company match," Fidelity's Eliza Badeau told the Post. "The most important thing to do is just start saving as early as possible and take advantage of that whole match."
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