Part of the long-term impact of COVID-19 is that it’s left many people questioning their plans for the future. Right now, that may mean getting a new job. Over the long term, it may mean rethinking retirement. Whatever your plans for retirement are, however, you’re going to need a plan to finance them. Here are some tips to help.
Dig in for the short term
If COVID-19 has left your finances looking the worse for wear, then you really need to prioritize improving your financial health now. There are several reasons for this but most of them hinge on the fact that nobody can tell for sure what’s going to happen in the future.
What you can tell for sure, however, is that right now, around the world, interest rates have a lot more scope to go up than to go down. If interest rates go up, debt becomes more expensive. This means that there’s even more reason than usual to make a serious effort to tackle any debts you owe.
The two main approaches to tackling debt are the snowball method and the avalanche method. They both have their potential advantages and disadvantages. At the end of the day, however, the key point is to choose a strategy that works for you and stick with it.
Boost your protection
The next few years are almost certainly going to be a rocky road for most people to travel. This means you need to do your best to minimize the impact of any unpleasant surprises. Having emergency savings is a great place to start. Ideally, you should also have savings for any predictable expenses, from new shoes to new kitchen appliances.
Realistically, however, very few people are going to be able to save enough to cope with serious expenses like medical bills (human or animal) or legal bills. That’s why it’s important to have adequate insurance cover. You should definitely shop around for the best deal, but never compromise on protection.
Turn savings into investments
Saving is great and should definitely be encouraged. At present, however, even the best savings accounts are highly unlikely to pay enough just to keep pace with inflation. In other words, the money you keep in a savings account will probably lose its value over the long term as the cost of living increases.
Of course, this may change in the future. Even so, over the long term, the very best returns are more likely to be found in the stock market and/or the property market than in savings accounts. If you’re not sure about navigating your way through these, then there are wealth management firms that can help.
In fact, even if you are confident about your ability as an investor, it can still be very useful to bring a professional on board. They may be able to guide you towards options you wouldn’t have been able to discover yourself (at least not easily).
Ideally, you’d bring them onboard as early as possible so that they can guide you through your choices as you approach retirement. At a minimum, get professional advice before making any significant decisions such as changing your IRA type.
Photo by Cottonbro
