Covid-19 Impact on Your Retirement
In a span of weeks, the COVID-19 crisis has cost more than 30 million Americans their jobs, including many who were nearing retirement. For many people in their late 50s and early 60s, losing a job may mean more than just losing a paycheck; it can force early retirement and create havoc on the best laid retirement plans.
Here are four ways to help reset your retirement:
Talk to a financial professional and discuss your thoughts with your family.
As a initial and simple first step, you should add up your monthly living expenses, starting with the essentials: mortgage, rent or condo fees, utilities, groceries, etc. Other common essential expenses may include auto and home insurance and phone or internet service. If you are helping an elderly relative get by or paying for a granddaughter’s education and wish to include that as a continuing expense, add it in.
Determine your monthly income: The two main income sources for retirees are protected income and potential income. Protected income is income that is guaranteed for the rest of your life and only comes from three sources: Social Security, pensions and annuities. Keep in mind that Social Security typically covers only about 40 percent of your pre-retirement income. While you can collect Social Security as early as age 62, your monthly check will be significantly smaller at this age vs. full retirement age.
Consider buying an annuity to generate protected lifetime income: Before the era of near-zero interest rates, fixed-income securities were a popular option for risk-averse investors desiring significant and steady income. Today, annuities have become a leading way to capture many of those advantages, plus guaranteeing a source of income for the rest of your life.