There are a lot of responsibilities at home now, but overseeing finances is just as important.
Most Americans are spending much more time in their homes during the COVID-19 crisis, which means they’re working, caring for family, cooking, cleaning and exercising all in the same space. Doing those tasks with not much of a physical break in between can be overwhelming.
And because of all of those increased responsibilities at home and work, about half of Americans said they don’t have time to address their investments and retirement savings, according to a Fidelity survey.
“Understandably, this is a stressful time for everybody, and our days may be filled with new challenges and responsibilities that keep us occupied from morning til nights,” said Alexander Koury, a wealth management adviser at Hosler Wealth Management. Americans are losing sleep over the uncertainty of their finances, employment, health and the well-being of their loved ones. “Instead of not having time, make time.”
Even before COVID-19, many workers were already unprepared for retirement. There was a looming retirement crisis in the United States, as people juggle paying for housing, education, child care and some sort of comfortable lifestyle. Not everyone was ready to retire when they did, but had to because of unforeseen circumstances, such as an illness or layoff. COVID-19 has the potential to worsen that situation, as unemployment claims hit record levels and Americans consider tapping into their retirement savings or halting them altogether to make ends meet. Don’t forget market volatility, which has added to the financial anxiety of investors.
With all there is to worry about, putting retirement savings and investment strategies to the side seems normal, but advisers caution Americans to create time to review their finances and make necessary changes. Koury suggests reserving 30 minutes on the calendar for a financial review, and to include a partner or loved one. “The important thing is to keep it simple, and start a conversation especially if you’re feeling overwhelmed or anxious,” he said. There are numerous topics to discuss: budgeting, cash flow, emergency accounts, retirement plans, estate planning and taxes, for example.
Reviewing finances, especially in the middle of a pandemic, can be stressful and scary, but it’s necessary, said Chris Schiffer, senior vice president at Wealth Enhancement Group. He recommends tackling one task at a time, such as balancing your checkbook, reviewing 401(k) statements or looking over expenses. “Like anything else that you practice, you will get better,” he said. “The more you work on it, the easier it will be.”
Creating and maintaining a financial plan also allows people to stick to their goals, such as retiring in the middle of a health and financial crisis.
Retirement is only one aspect of the financial picture. During this current crisis, Americans are worried about paying down student loans and other debts, the ability to pay for children’s college education and finding money to save for other goals. Four in 10 people said they’re concerned about their ability to pay monthly bills, the Fidelity survey found. Some have started taking steps to relieve some of those stresses: nearly half said they’re cutting back on discretionary spending, while others have said they’re working to increase their emergency savings and rethink how they manage their money.
This crisis has helped people realize the fragility of their finances and estate planning,” said Catherine Valega, a financial adviser and founder of Green Bee Advisory. She has developed a ‘Grab and Go’ document organizer where she can keep track of and review various documents, such as estate plans and insurance coverage, she said. Financial advisers can also help, even if a relationship with one hasn’t yet been established. People may be stuck at home, but they can still search for and find the right adviser to help make sense of money management — especially during a crisis.
“Spending time organizing your financial house is just as important as an annual physical with your doctor,” said Marianela Collado, a senior financial adviser at Tobias Financial Advisors. “This is a matter of your financial health.” Collado said people should dedicate time to review their finances on a monthly or quarterly basis, and to analyze numerous aspects: cash flow, employer benefits (including retirement accounts), a savings plan, trajectory toward future goals and asset allocation that maximizes growth. Savers should also weigh the pros and cons of different types of accounts for various goals, such as a 401(k) for retirement savings as well as a Health Savings account or individual retirement accounts.
“Taking the time to button up your financial house will help folks feel empowered and give their working day purpose,” she said. “Taking time to do ‘financial care,’ which is a form of self-care’ will prove to be invaluable in the long term.”