Covid-19 has wreaked havoc on the global economy and has had a profound impact on retirement savings. According to a survey, retirement account balances have declined by an average of 23%. This is a significant blow to those who are nearing retirement and are depending on their savings to support them. Bill Schantz of Mid Atlantic Financial LLC will explain how retirement savings were affected by the Covid-19 pandemic.
5 Effects of Covid-19 on Retirement Savings
Job Security Is at Risk
The pandemic has also created a lot of uncertainty when it comes to job security. Many people have lost their jobs or have had their hours reduced. This can make it difficult to save for retirement when you are trying to live on a reduced income.
Even if you are still employed, Bill Schantz believes that given the economic situation, everyone is worried about the stability of their job. The pandemic has shown us that no job is safe from being impacted by an unforeseen event. This can make it difficult to feel confident about saving for retirement when your employment status could change at any time.
Healthcare Expenses Are on the Rise
Another effect of the pandemic is that healthcare expenses are on the rise. This is due to the increased need for medical care and the added costs of personal protective equipment (PPE).
This can be a major concern for those who are retired or nearing retirement. Healthcare costs are one of the largest expenses in retirement, and they are only expected to increase in the coming years.
Delay in Retirement Plans
The pandemic has also caused many people to delay their retirement plans. This is due to the financial impact of the pandemic, as well as the increased uncertainty about the future.
For some, this may mean working for a few extra years. For others, it may mean putting off retirement altogether. Either way, the pandemic has made it difficult for many people to stick to their original retirement plans.
Financial Losses
Because of Covid-19, people have suffered heavy financial losses. The main reason for this is the stock market crash, as well as the overall decline in the economy.
This can be a major setback for those who are depending on their retirement savings to support them. While businesses have been shut down while inflation constantly remains on the rise.
Utilizing Long-Term Savings
Another effect of Covid-19 on retirement savings is that people are being forced to utilize their long-term savings. This includes tapping into retirement accounts or taking out loans from 401(k)s.
For many people, according to Bill Schantz, this is the last resort option. However, the pandemic has made it necessary for some to withdraw from their savings in order to stay afloat.
Conclusion
Covid-19 has had a profound impact on retirement savings. Pensioners and senior citizens have been the worst affected by the pandemic. However, Bill Schantz believes that as the world is slowly recovering, the overall economy may witness a boost. Meanwhile, everyone should keep a strict eye on their expenditures if they want to have a decent amount of savings for their retirement.