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What to Do if Your Finances Have Changed Since Covid-19

COVID-19 has affected how Americans plan and save for retirement. According to a recent survey, over 25% responded that they have decreased or stopped contributing to their retirement savings since the onset of the pandemic. Many cited a loss of employment, reduced hours, or general economic uncertainty as the reasons for the reduction.

In another survey by the Federal Reserve Bank of St. Louis, 61% of respondents anticipated running out of their emergency savings by the end of 2020, including 19% who reported having spent more than $5,000 and 16% who have already exhausted their savings.

While everyone’s financial situation is unique, here’s how Jemma Financial can help.

Working?

If you are working, the pandemic serves as a reminder to review your financial situation. Make sure you have an emergency fund or adequate liquidity to cover a minimum of three to six months of expenses. Revisit your expenses—not only major ones such as your mortgage or rent—but also small bills that eat away at your savings. Revisit your long-term investment goals to maintain, or even increase, your contributions to your retirement account or non-retirement investment accounts.

Lost Work or Income?

If you or your significant other has lost work or income, avoid withdrawing money from a retirement account. When it comes to debt, prioritize paying down high-interest debt, refinance, or negotiate with mortgage lenders or credit card companies to reduce or postpone any owed payments. On the expense side, look for ways to reduce your spending. If possible, even saving or investing 1% of your income is better than foregoing it completely.

Retired?

If you are already retired, review how your retirement income from Social Security, investment accounts and IRAs match up against current expenses. If you can comfortably pay your bills, there may be no need to significantly adjust your habits and spending. In addition to establishing an emergency fund or strategy for funding for three to six months’ worth of expenses, you may need to revisit your investment portfolio to make sure your investment goals stay on track.

When it comes to money, avoid making emotionally driven decisions. Regardless your situation, it is often beneficial to discuss with a Financial Advisor how the pandemic has changed—or not changed—your finances and keep your long-term investment plan on track. Start the conversation with one of Jemma’s experienced Financial Advisors.

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