If you’re in your 60s, you or someone you know have probably felt the financial squeeze caused by the year-long COVID-19 pandemic. You might have lost your job, or had to cut back on your retirement plan contributions just to pay the bills and make ends meet. Thanks to the CARES Act, many savers withdrew funds from their retirement plans without early-withdrawal penalties.
You could be part of nearly one-quarter of Americans, who, according to a survey by Personal Capital, had to decrease their retirement plan contributions the past 12 months. Or, in spite of all that financial chaos, because of good planning you could be part of the 75% who managed to end 2020 in pretty good shape.
Most savers in their 60s at the end of 2020 had a median balance of nearly $600,000. That median figure came from a single survey of people who actually had a retirement plan, but financial analysts are generally encouraged to see how well our nation’s gen-Xers are on top of their retirement plans.
Typical retirement withdrawals are about 4% of the whole amount, which comes to $24,000 a year in income. Add the average yearly Social Security benefit — just above $18,000 — that comes to $42,000 for a retiree to live on. It’s not a fortune, but it’s enough to pay the bills and meet modest living expenses.
Retirement plans did so well because of the rapid recovery of stocks. Wall Street staged a quick recovery and gained back everything it lost long before 2020 ended. Retirement savers who stayed in the game for the long run, actually ended the year with more money than they began — even if they had to cut back or stop contributing altogether. So, along with the housing market the stock market survived the pandemic quite well.
In another survey of 2,000 individuals ages 62 to 75, the Employee Benefit Research Institute asked seniors about their spending habits. The bottom line was that seniors who worked hard and saved for years with the goal of enjoying a comfortable retirement have carried those habits into retirement.
The survey found that nearly 70 percent said their standard of living “is the same or higher” than it was when they were working. Over 60 percent believed their spending “is appropriate for what they can afford.” Nevertheless, many retirees — 46 percent — said they should have saved more for retirement.
So, if you are in your 60s, now would be a great time to stop and take stock of your resources. The key to a balanced retirement portfolio is an understanding of risk management—safety vs. high growth—and other factors like knowing your tax exposure.
Then there is this basic truth and silver bullet against having more life left at the end of your money: You need a guaranteed income in your golden years that will be inflation proof any weather financial crisis. The right mix of insurance, money market, annuities, and government guaranteed savings accounts, as well as sound advice from a qualified financial advisor can keep you safe, secure, and comfortable in retirement.