The Pandemic Is A Financially Challenging Marathon Not A Sprint
When COVID-19 first made its appearance, I think most of us imagined it would be a fairly short-lived event. However, as it is, the social distancing, the closure of businesses, the remote working, the unemployment, all of these things are apparently going to continue into at least the spring of 2021, perhaps even longer.
No one was ready for this. It wasn’t like we were in training for it. Those of us who thought it would be an easy sprint are now realizing it is a full-on marathon. And anyone who’s ever run a marathon knows that you have to train for at least a year to be physically, mentally and emotionally fit to run one.
We Do Our Best To Plan For The Unexpected But Can’t Plan For The Unknown
The one thing about life is that you simply never know what might happen. We do our best to plan for things base on the past, but when something we’ve never experienced before happens, we have to do our best to ride it out and learn as we go.
If You Have A Retirement Fund
If you have established a retirement fund and are in a position to continue contributing that’s wonderful. Keep contributing and keep your focus on the long-term goals. Maintain correct allocations between short, mid, and long-term investment buckets.
If you are no longer able to contribute but don’t need to withdraw funds, that’s great news too. However, if your circumstances require that you take funds out of your retirement plan, note that while Congress made it easier to take a withdrawal without incurring penalties, it’s not guaranteed you’ll be able to get your money out. It all depends on if your retirement fund is with your employer. It turns out that retirement plan providers read the new law’s withdrawal exemption as an optional plan feature. That means the decision whether to offer this or not is up to your employer.
According to an article at cnbc.com, “There are a lot of employers that have decided not to implement the Coronavirus Related Distributions. Almost half, 44%, of plan sponsors were still deciding which of the CARES Act provisions to implement, according toa survey by the Plan Sponsor Council of America released April 14. Of employers that have made a decision, almost 70% of large organizations are allowing CRDs up to $100,000 or 100% of the vested amount, as opposed to only about one in five smaller organizations.” https://www.cnbc.com/2020/05/05/penalty-free-401k-withdrawals-may-be-more-complicated-than-you-think.html
If your retirement funds aren’t in an employer plan you will be able to make withdrawals. And, if you have a Roth IRA, you can withdraw any money you’ve directly invested into the account at any time, without taxes or penalties.
Be Alert To Scams
Your trusted fiduciary financial advisor will be able to guide you if you are considering making a withdrawal. But only take advice from a financial advisor you know and have worked with. Tragic circumstances attract scammers who will do their best to lure you with attractive investment opportunities. They may suggest taking more money out of your retirement account to invest in short term “opportunities” to make up for the pandemic related losses. Don’t do it. It’s bad enough negotiating the sacrifices we all have to endure. You don’t need to be scammed in the midst of a pandemic. Be cautious. This is a marathon and you need to protect every resource you have to see you through to the end.