One of COVID-19’s most significant impacts outside of human health and wellness? Retirement planning. With the economy in so much turmoil, it’s difficult to know how and when to invest money for the future and what to do with current retirement savings. But short of stuffing cash into your mattress, there are some strategies you can use to protect your hard-earned retirement money.
Ride Out the Market
Maurie Backman, who contributes to the Motley Fool, advises that the present “bear market” is expected to last around 14 months based on historical data from similar seasons. It may be a good time to delay retirement, sit back, and observe until the market settles into a more normal range.
That said… this should also be a great time to grab up some stocks at rock bottom prices and reap the rewards when they soar again. (Rest assured, they will soar again).
Feed More $ to Your HSA
This is also a great time to put away extra money for retirement by taking advantage of the health savings account (HSA) catch-up rule. This rule allows those aged 55 or older to add up to $1,000 more to their HSA as a “catch-up contribution”.
Since your funds roll over in full year after year, and you don’t have to pay taxes on them until you withdraw in the future, your HSA can act as a great addition to your other retirement savings.
Start a Side Hustle
Have you thought about picking up some side work during this time? This can be a great way to transition from a full-time career to a more flexible lifestyle (all while making a little extra dough!).
Start that side business you’ve always wanted and sock the extra funds away in your retirement savings. You can even do some bartering with other businesses to get things you want and provide a need for someone else.
For instance, if you do woodworking as a hobby, you could build custom yard ornamental items for a nearby lawn service and get your grass cut all summer. Or you could provide sewing and cooking services in exchange for a handyman to make repairs to your home. It’s money not spent, therefore saved.
Roll Funds to Safe Accounts
For those who are not planning to retire in the next few years, this can be one of the best times to put extra money away for retirement. So instead of panicking and cashing out the 401(k), consider rolling some funds to your HSA and high-interest emergency savings, which are less vulnerable.
Pay Down Debts, Capture More Value
Other smart things you can do as part of retirement planning include reducing your overhead costs and (if you own) improving your home’s condition to increase its value.
This is also a good time to focus on paying down debts and diversify investments. Consider what you can do to support a cause in your community this year. Want to build a presence for your new business? How about sponsoring a kids’ sports team or making a generous donation to the local food banks (both tax write-offs). Use credit and rewards card programs that offer cash-back and hidden bonuses.
See! You’ve got a lot of creative options when it comes to putting more money into your retirement savings. By using the strategy of building value combined with moving investments to safer accounts, you should be able to ride this out and feel more than comfortable in those golden years.