COVID-19 has paused retirement saving for many.
Whether you have been working for a few decades or a few years, you know you will not be working forever.
You will eventually retire.
When this happens, you will still need money.
To provide future income, you have been diligently saving for retirement.
Unfortunately, COVID-19 interrupted the economy.
Should you continue to set aside money or wait until things return to “normal”?
According to a recent CNBC article titled “Financial planner: Here’s when you should temporarily stop saving for retirement during the pandemic,” this depends on your current financial security.
When it comes to saving for retirement, financial advisors usually recommend setting aside 20 to 15 percent of your monthly household income.
Although this is certainly feasible under normal circumstances, nothing about COVID-19 is normal.
You may need to focus on your current needs instead of your future needs for awhile.
Look at your current financial situation.
Do you have three to six months of emergency funds available?
If you do, you may be able to continue making the same contributions or simply throttle back a little.
If you are like many Americans, you do not have an emergency fund.
For you, it would be wise to funnel any money you would use for toward retirement into your emergency fund.
With the state of the economy and the uncertainty about what the future holds, an emergency fund is essential.
Having an emergency fund in place can provide you with some financial peace of mind.
You should also review your budget.
Cancel any unused or unnecessary subscriptions.
You may need to temporarily give up wants in order to ensure you have what you actually need.
Although you may be spending less on entertainment or dining out, do not shift it to spending online.
Funnel this money to your emergency fund.
Although you may need to pause making contributions to your retirement fund, be sure you continue your retirement saving as soon as the COVID-19 is behind us.
Reference: CNBC (March 18, 2020) “Financial planner: Here’s when you should temporarily stop saving for retirement during the pandemic”