The Wuhan Coronavirus (COVID-19) poses a threat to millions of Americans’ health and financial well-being.
In recent weeks, it’s become clear that even if a vaccine is mass-produced in record time, the economic impacts, for many it appears, will linger for years.
That new reality is causing Americans to rethink how they are preparing for retirement. (The Motley Fool)
It’s not surprising, then, to learn that 55% of Americans are rethinking their retirement savings plans, according to new data from MassMutual. And of those who plan to make changes, 54% say they’ll be contributing less money to their 401(k)s or IRAs, while 22% plan to start contributing more.
If you’ve been impacted financially by COVID-19 or fear you will be, you may be wondering whether it pays to alter your retirement savings plans. The answer? It depends.
Funding a retirement plan is almost always a smart idea. But if you need money right now to pay for near-term expenses, then it absolutely makes sense to put less into a 401(k) or IRA and allocate more of your limited cash to your immediate needs, like food, medication, and housing.
Along these lines, if you don’t have a healthy emergency fund, then building one should take priority over saving for retirement. Under normal circumstances, you should aim for three to six months’ worth of living expenses in the bank. But these aren’t normal circumstances, and given the many months of economic uncertainty that could lie ahead, you’d be wise to aim for the higher end of that range — even if you need to scale back on retirement plan contributions to pull that off.
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