Dec 21: BEST FROM THE BLOGOSPHERE
December 21, 2020
How will the pandemic affect your retirement?
As we prepare to start a new year, it appears that there is a faint light visible at the end of the tunnel that is the pandemic. Vaccines have been developed that appear promising and hopefully they’ll start to be in distribution by the time you are reading this.
That said, the pandemic has had a serious impact on all of us, and especially on our plans for retirement. An interesting article in Espresso covers the topic in detail. Here are some of their key findings.
Those relying on their own savings, rather than a pension plan from work, for retirement may have to postpone their retirement “by up to five years,” the article reports. This is because of the shellacking our economy – and our savings – took due to the COVID-19 outbreak.
But in an unusual twist, the article continues, “some people in their 50s and 60s are being forced to retire early.” Many of these folks are people who lost their jobs due to the pandemic, the article notes.
Many of us with adult children are having to help them out more than usual due to the crisis, Espresso reports. “If you want to help your kids out,” states financial planner Lawrence Sprung, speaking to U.S. network CNBC, “make sure you don’t give them an amount that is greater than, or outside the scope of your normal excesses.” The implication is that if you raid your retirement cookie jar to help the kids, it will mean you’ll retire later or with less.
And, Espresso reveals, the opposite situation – kids helping parents – has also become more common. Research from the American Association for Retired People “found that roughly a third of adults in their 40s to 60s had offered financial support to their parents in the last year.”
While Espresso warns that some of us will retire with less, others will retire with more savings than planned. “A significant number of Americans – including more than half between the ages of 55 and 64 – are spending less money during the pandemic,” the article tells us.
One thing that’s become popular as we all sit around at home more is renovating the old home office. Be careful, advises Espresso. South of the border, the average kitchen renovation costs $56,000, but tends to add only $38,000 (on average) to resale prices.
The article advises older people to consider part-time work, launch a business, or to delay government retirement benefits for as long as possible. “It’s worth it to wait until (you can) receive full benefits,” Espresso suggests.
Finally, the article says, if your savings have taken a hit in the short term, “focus on the long-term plan.” Markets can rebound so don’t let short-term bumps in the road cause you to “act irrationally,” Espresso says.
Members of the Saskatchewan Pension Plan have flexibility when it comes to retirement savings. If you’re out of work and can’t contribute, you can take a pause. If you’re one of the lucky ones who is finding they have more money to save these days, consider adding a few extra dollars to your SPP account. The experts running SPP’s finances always focus on long-term investing, and that’s allowed SPP – which celebrates its 35th year of operations in 2021 – to have an average rate of return since inception of over 8 per cent. That’s quite an achievement when you consider that the last 35 years includes Black Friday in 1987, the “tech wreck” of 2001-2, the Global Financial Crisis of 2008-9 and our current pandemic! Be sure to check out SPP today!
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.