Retirement In The Middle Of A Crisis


Post by: Eastlands Estate, 19 Jun 2020

There aren’t many areas of our lives that haven’t been affected – to a greater or lesser degree - by the Coronavirus pandemic. Everything, from socialising and shopping to working and travelling, has drastically changed.

The financial markets too, have taken a huge hit, which has naturally made anyone with investments tied up in the stock market more than a little twitchy. It is especially worrying for retirees, or those who were thinking of retiring this year.

It’s natural to feel worried when we see daily news reports about how many percentage points have fallen off the stock market, and how many billions of Dollars and Rands have been lost. But there is actually some good news here.

The secret to surviving the financial fallout of Covid-19 is not to panic.

Admittedly, it’s very easy to focus on the large numbers and the fact that your portfolio is probably down – perhaps significantly - overall. But this is not the time to withdraw all your money and stick it in a shoe box under your bed! Apart from being a security risk, when the markets pick up again – which they undoubtedly will – inflation will ensure that the value of cash, and cash-only investments, is quickly eroded.

The smart money right now is staying where it is. Assuming your retirement plan was sound to begin with, doing nothing is the intelligent thing to do. It’s natural to feel panicked after talking to friends and neighbours about what they’re doing but try to resist getting caught up in other people’s stories. Stick to your own plan and remember that while your immediate plans may have changed, it’s only temporary. The markets will recover.

When thinking about making big financial decisions, always refer back to your time frames and financial goals. The money you have in your investments is there for the long haul. Yes, the Coronavirus pandemic may affect stock markets in the short term, but it’s unlikely to change much about your finances over the long term.

Take comfort in the diversity of your assets. If you have stocks, property, government bonds, jewellery or other sources of potential income, it’s exceptionally unlikely that they will all lose value at the same time. Some might even increase. There are sure to be at least one- or two-income streams that will keep providing you with enough money to keep you going until the markets recover.

In the meantime, however, you may find you need to adjust your expectations of what your investments will deliver in terms of income over the next few months. We’ve put together some great tips for riding out this financial hiccough and coming through on the other side with your planned retirement very much intact.

Delay Discretionary Spending
While our government tell us it’s our duty to spend, spend, spend to support our struggling economy, it might be prudent, at least for a while, to put off buying a new lounge suite or second car!

Don’t Skip Payments
It may be tempting to avoid paying credit card and other bills right now, but this will only get you in trouble further down the line. In addition to affecting your credit rating, interest can compound at a frightening rate, putting greater strain on your finances in the uncertain months ahead. If you are genuinely struggling to make a payment, chat to your bank – they will be happy to help you come up with a payment plan.

Resist the Urge to Sell
Don’t liquidate assets – financial crises create buyers’ markets and you’re only likely to get “fire sale” prices. Unless you absolutely have no choice, hang on to what you’ve got!

Consider Some Kind of Work
Granted, a crisis is not the best time to look for work, and as a retiree, you may not previously have considered it. But there are many opportunities to supplement income that has been temporarily reduced by the Corona crisis, and which you can do online from home. Accounting, bookkeeping, online English teaching and business coaching are just a few ideas, depending on your skills and experience.

Give Yourself a Break
Cutting back too harshly on your expenditure because you’re worried about your finances is not great for your state of mind. Be kind to yourself. Right now, this might not seem like the retirement you dreamed of – the one where you travel, see your grandchildren and do everything you didn’t have time to do while you were working – but it will pass.

You’ve spent your whole life working hard, and while it’s prudent to not be too indulgent at the moment, don’t deprive yourself of the things you need. You’ve earned them!

 

 

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