COVID has disrupted the social and financial plans that many people were looking forward to in 2020. This has been especially true for people who are retired or nearing retirement. This week on our Instagram Live, we discussed retirement during COVID and its financial and social impact on retirement planning with Jaye and Tammy. We also gave some advice on how to best prepare for retirement to avoid these disruptions and how to turn this challenging time to an opportunity.
How can COVID affect retirement and retirement plans due to financial changes?
Jaye, who recently retired, discussed dealing with living on a reduced income. After recovering from an illness, she decided to retire earlier this year. She is currently grappling with living on a lower income. COVID has also affected her spouse who is still working but now living on CERB due to the pandemic. This has severely impacted their financial plans and led Jaye to start a small part-time business in order to increase her income.
However, for some people, taking early retirement and reducing work hours during COVID may have increased their finances. Tammy, who is a social media marketer, mentioned that her business has largely benefitted from the pandemic. With many businesses shifting the majority of their sales online, people in marketing or sales can take this opportunity to get more customers and grow their business. She has certainly seen a spike in her income even as she has slowed down and made the decision to move into semi-retirement.
Other than a change of income, you might find yourself considering going back to work to help out your community. Our first guest Jaye changed her mind about retirement and went back to selling her immunity-boosting vitamins as a certified nutritionist to help the community fight COVID and improve their health.
How can you manage your finances during retirement better, especially during COVID?
Both guests mentioned that COVID has been a great time for them to assess their current situation and make some changes. If you are comfortable with managing your finances, carefully check each aspect of your income, decide on your financial priorities, and create a budget around your financial plans. Tammy shared how COVID pushed her to carefully examine her spending. This allowed to understand her financial situation and cut back on expenses that were not necessary. By doing this, she realized she didn’t need to spend as much as before to maintain her standard of living. She was able to reduce her expenses by $3000 per month!
If financial planning isn’t your strongest suit, work with a Certified Financial Planner (CFP)! If you are working with one, make sure that you are happy with the service. It is very important for you to work with a financial planner that prioritizes your needs and helps you reach the financial goals you set. Jaye shared how they worked with a financial planner before they retired, but were disappointed by the experience.
What advice can we give for people to manage and reach retirement during COVID?
- Ensure that all debts are paid and have savings as a safety net.
- Some areas of the stock market have been losing value because of COVID. If you have investments that you are dependent on for your income, this will put you on risk during unexpected times not just during COVID but any economic or political turmoil. To make sure that you have financial security, work toward having 2 years of living expenses in a high-interest savings account.
- As we mentioned above, COVID is a huge eye-opener from a financial standpoint. Understanding your expenses and creating a budget is vital for your financial health. Tammy shared how looking at the details and creating a budget earlier on could have helped her save significantly more.
- There are many activities h you can do for low costs. Enjoying the outdoors is a great budget-friendly activity to enjoy your time.
- If you have a greater income during COVID because of the nature of your business, it is very important to support small businesses that might not be as fortunate. Tammy shared how rewarding it has been to support small businesses to help them survive during COVID.
- For business owners that spend money on networking, it’s important to review your spending whether it’s going on business dinners, having coffee chats, or hosting events. You can prioritize your activities, create a budget, and substitute low priority ones with online networking opportunities. During COVID, it’s all about attending online webinars, joining virtual coffee chats, or connecting on LinkedIn!
- Referrals are very important to grow your business while reducing your marketing expenses. Engaging more with your clients and improving your relationships can lead to greater support from your community and help your business grow.
- With having limited socialization during COVID, you can use this time as an opportunity to prepare for retirement. If you are working you are most likely used to being surrounded by many people. This might make it difficult for you to adapt to retiring and seeing fewer people daily. Since COVID already limits us socially, you can use this period as practice for retirement.
- You can use utilize your increased free time during COVID to pick up more hobbies and enjoy your retirement. If you worry about food safety, you can start your own vegetable garden! Painting and gardening are also some options that you can do at home. To explore the outdoors while remaining safe, you can also explore photography and hiking.
We hope you enjoyed reading our blog about ‘Retirement during COVID’. You can find more relevant content about the latest financial news and our live chats on our News Blog. To learn more about our discussion, you can watch the full live chat here. Stay tuned to learn more tips on a new topic each week on our Instagram Live at 5 on Instagram! To check last week’s blog article about ‘’Small Businesses and Phase 2 of COVID, click here.