2020 WAS FAR from what most would consider an ideal year for either physical or financial health. While the world waits for the COVID-19 vaccine to become widely available, economists encourage people to plan ahead for when the economy recovers.
“The news of a vaccine is very good,” says Kevin Fix, senior financial adviser at Fullen Financial Group, Inc. “More talks in Washington about additional stimulus and business owners’ income affected by the virus are positive for the markets.”
At the peak of the first shutdown, the Bureau of Labor Statistics reports that 18.1 million people in the U.S. were laid off.
It’s hard to dictate what the economic recovery period will look like, particularly because there’s a lot of uncertainty about the potential long-term impacts the pandemic will have on specific industries.
“There seems to be some pent-up demand from people dealing with this as long as we have,” Fix says. “There could be a pretty significant surge in the second half of this year with economic activity, assuming things go well with the virus.”
Here are some ways you can improve financial well-being in the age of COVID-19.
Personal Goals
Fix suggests considering three things in the near future. First, have a financial plan with specific goals you can work toward. Start to save as early as possible and take advantage of company savings plans while ensuring you are able to measure your progress.
Secondly, ensure that you have readily available cash. This will help meet short-term goals and, obviously, can be used in case of emergency.
“We saw what can happen in February and March (2020),” Fix says. “Things can turn on a dime in terms of sources of income, in terms of investment values. It is always a good idea, and reinforced during the pandemic, to have some liquid cash reserves available.”
He also suggests investing with a purpose in order to help support your goals. Make sure the risk profile of your investment portfolio matches the time horizon. For example, if retirement is 20 years down the road, you can remain a little aggressive, but if a down payment for your home or paying for a child’s education is the goal, look to reduce risks that would cut the principal.
“The pandemic also made people think a little more about life insurance and estate planning,” Fix says. “It’s always a good idea to look at those from time to time to make sure there are coverages in place in case something unexpected happens to you.”
Retirement
Retirement is something that requires careful planning and coordination. It is a reward for a career’s worth of hard work and dedication. That being said, there are things to start paying closer attention to as the process begins.
Fix mentions that is always good to make sure home mortgages are paid off by the time of retirement, since minimizing fixed costs in retirement will correspond to more flexibility in spending.
“Retirement is one of those times, especially in the corporate world, where decisions are being made around pension, when to take Social Security, how best to withdraw assets from your investment portfolio,” Fix says. “If someone is within 10-15 years away, talk to an adviser. It gives an opportunity to see the full picture with expert advice.”
Resources
Nerd Wallet has a (free) financial health calculator with eight key measures. Take the quiz, see where you rank and read tips to build financial resiliency. www. nerdwallet.com/blog/financial-literacy
AARP has a Retirement Calculator that helps determine if you’re saving enough to retire the way you want. www.aarp.org/ work/retirement-planning/retirement_ calculator.htm
Sign up for an account with the Social Security Administration to see what benefits you may have at retirement. Tools calculate monthly payments determined by age, date of retirement and more. www.ssa.gov
6 Ways to Determine Financial Health
Know, utilize and track these metrics:
• Net Worth
• Income
• Credit Score
• Savings Rate
• Debt-to-Income Ratio
• Retirement Fund
Rocco Falleti is an associate editor. Feedback welcome at rfalleti@cityscenecolumbus.com
