Unfortunately, the spread of the coronavirus has resulted in extreme stock market volatility, reducing — at least on paper — the value of many people’s retirement accounts. The losses aren’t real until you sell. Nonetheless, seeing a drop in your account and the possibility that it may take some time for it to recover is scary.
One option is to delay your retirement and work a little longer, if possible. Working a few more years may help you boost your savings while you wait for the U.S. economy and the stock market to recover.
In a 2018 report, Gallup noted that the retirement age has been rising. In the five Gallup surveys conducted between 1991 and 2003, it found that the average age of retirees was 58. From 2004 to 2010, that number rose to 60, and since 2011, it has averaged 61.
Now is a good time to run or rerun your retirement numbers. Use this AARP calculator to see whether you’re saving enough. If you’re not, you may have to adjust your plans to leave your job.
Only 20 percent of nonretired investors have calculated their retirement revenue and expenses, according to another Gallup poll.
The poll asked nonretired investors how much thought they have given to certain aspects of retirement, such as the best age to start taking Social Security or what strategy they plan to use to draw income from their retirement savings accounts. People said they thought more about how they will spend their leisure time (53 percent) compared with when to start receiving Social Security (45 percent), how to pay for routine medical expenses (45 percent), how to draw income from their retirement accounts (41 percent) or how to afford long-term care or assisted-living costs (37 percent).
In a prophetic statement with no idea that a pandemic would soon upend the economy in the United States, a Gallup researcher writing about this 2018 poll said: “While working later in life in order to maintain income and maximize Social Security may sound appealing to those who have not yet retired, health crises, layoffs and other issues beyond investors’ control could derail these plans. As such, investors would be well-advised to start their retirement planning as early as possible.”
In addition to working longer, you may have to rethink your plans on when to take Social Security, which I discussed in a recent newsletter.
Here are four pieces of retirement advice that you should question as you plan to leave the workforce.
If you’re in good health and can keep your job, don’t take working longer off the table if it means you’ll have a more secure retirement.
Please join me on Thursday, April 23, at noon (Eastern time) for a live discussion about your money.
Joining me for the chat will be Persis Yu, a staff attorney at the National Consumer Law Center (NCLC) and the director of NCLC’s Student Loan Borrower Assistance Project. Also participating in the discussion will be Andrea Bopp Stark, a staff attorney at the NCLC. She focuses on fair debt collection practices, including criminal justice debt.
During the pandemic, the NCLC is offering free digital access to the book. You can download, print or email it at nclc.org/readsurvivingdebt. If you want a hard copy, you’ll have to pay the retail price, but shipping is free.
As I wrote in my review, “Surviving Debt” provides guidance on the most pressing financial concerns, including dealing with a possible eviction as a result of a coronavirus-related layoff or furlough.
Reader Question of the Week
If you have a retirement question, send it to email@example.com. In the subject line, put “Question of the Week.”
Q: I filed my 2019 taxes, and my adjusted gross income was $86,000 because of the retirement income I received. My stimulus check was $650 based on my 2019 return. I would not have filed early had I known it would reduce what I received. In 2020, I expect my income to be under $75,000. Do I have any recourse?
A: The $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or Cares Act, included up to $1,200 in stimulus payments for individuals with an adjusted gross income of $75,000 or less and up to $2,400 for couples with an adjusted gross income of $150,000 or less. Payments are trimmed by $5 for every $100 of income above the low end of the dollar range for your filing status.
Although you received a reduced stimulus payment, you may be able to get the difference ($550) when you file your 2020 return next year. The coronavirus-related stimulus payment is actually an advance credit. The IRS is using people’s 2018 or 2019 returns to determine payment so people can get the funds now during the pandemic.
Retirement Rants and Raves
Your thoughts: How have you been financially impacted by the coronavirus? Send your comments to firstname.lastname@example.org. Please include your name, city and state. Put “Coronavirus Impact” in the subject line. I’m also interested in your experiences or concerns about retirement or aging. You can rant or rave. In the subject line, put “Retirement Rants and Raves.”