At Paisa Invest, we often come across our clients who ask us rather earnestly that whether or not should they plan their retirement during COVID-19. Considering the same, the in-house experts at Paisa Invest have decided this entire article in an effort to answer the most relevant financial query under the current situation and help their audiences make the most informative decision on the matter.
What is retirement planning?
Retirement planning includes determining retirement income goals and forming a plan of actions to achieve those goals. This includes the allocation of savings to meet the financial requirements at a later stage of an individual’s lifetime.
Why should you plan your retirement during COVID-19 phase?
Loss of income sources: The pandemic has forced businesses and corporates alike to either shut down or perform remotely with half of the workforce. That has further led to people losing their jobs or receiving an unforeseen reduction in their salaries.
Uncertain future: With the endemic hovering over our heads, no business or employees are confident of what the future holds. The economy might get back on track once the current situation subsides. However, nobody is sure as to when the situation will improve, and we will have a vaccine to protect us from the virus.
Market decline: Financial volatility caused by the sudden outbreak of the novel coronavirus have racked the stock market for good. With this, the chances of financial loss have increased many folds for investors.
Impact on investments: Market decline has further led to discouraging investments. Without being able to diversify their assets, many people are anticipating a derailment of their retirement plans.
7 Steps for retirement planning during COVID-19
Avoid financial guess-works: With wrecked financial plans, many people are likely to make the wrong financial choices. However, financial experts believe that people without prior expertise and knowledge of systematically managing their finances are most likely to commit many financial mistakes then otherwise. Expertise for investing in optimum instruments, awareness about the consequence of taxes and loans on economic well-being is significant for being able to secure your retirement plans and financial well-being at the later stage of life.
Understand your total financial position: Reassessing financial portfolio and reviewing asset allocations to see if they fit your long-term financial aspirations are essential to have a financially secured retired life. That becomes all the more crucial under the current pandemic situation when people often fail to make required financial calculations to achieve their goals.
Analyse financial implications of longevity: The consideration of the intersection of wealth and health plays a vital role when an individual is planning their finances in a way to have enough to retire. With the global life expectancy rate going as high as 100 years with enhanced medical facilities and more, people have to consider if their savings are sufficient to help them have a comfortable retired life for so many years.
Save more and spend less: With social distancing directives in place, the affinities for extra expenses are less. That makes it convenient for individuals to cut on their expenses and endeavour to save more for their future self and aspirations.
Add more income streams: With companies shut down, markets collapsed and massive salary cuts around the world, the pandemic situation has made it essential for individuals to sort out ways to add more income streams by monetizing their talents and hobbies.
Renegotiate EMIs and loans: With a decline in most retail loans during the pandemic, the individuals can approach their banks to renegotiate their EMIs. The savings from these EMIs should be then directed towards retirement planning to help them make up for fewer income flows and the impact of the same on their retirement financial goals.
Reassess your retirement goals: Reassessing your retirement goals in consideration to the post-pandemic period will help you to reinstate your income to the pre-pandemic level. Once at a much stable state financially, an individual can further work towards meeting their financial aspirations for their retired life.
Hence are the most fundamental steps as suggested by the certified financial planning consultants at Paisa Invest that an individual should consider when planning their retirement during COVID-19.
Do you need professional assistance to help you manage your finances during COVID-19? Contact us today!
