Retirement funds have taken a beating in the last few months. Financial markets have been turbulent, and uncertainty about the impact COVID-19 may have on businesses and individual finances have made it more volatile.
While it may be scary to check your balances and see just how much ground you’ve lost, it’s important to stay calm. Pulling your money out of your retirement fund when it’s low will make it much more difficult for you to recover what you’ve lost and could lead to tax penalties. If you’re not sure what to do next, try these tips:
Know Where You Stand
Some people advise not looking at your retirement fund balance during a market downturn. While checking too often may be upsetting, it’s a good idea to review your balance at least once a month or prior to speaking with a financial adviser. Understanding where you are will help you make better choices when resetting your short, medium, and long-term retirement goals.
Seek Professional Advice
It’s a good idea to talk to a financial adviser about your options. The adviser will evaluate your portfolio based on your age, income status, and risk tolerance and help you determine if your money should be invested differently.
While it may be tempting to dial back how much you are putting into your retirement fund, it may result in a higher tax bill at the end of the year. Your best bet is to keep putting the same percentage of your income into your retirement. If you’re concerned that you may be in too many higher-risk investment vehicles, consult with a financial adviser.
Pay Off Debt
During times of financial uncertainty, the first priority after paying basic monthly bills is getting rid of debt. Look for ways to cut back on expenses and devote that extra money to debt repayment. After the debt is gone, put extra cash toward savings or increase your retirement contributions.
If you don’t have a retirement fund, now is as good a time as any to start. Take full advantage of any match your employer may offer.
If you are close to retirement, a financial adviser can help you take a clear look at your options. Don’t assume that you’ll have to delay your retirement.