Don’t Let COVID-19 Derail Your Retirement

Yes, many of us have taken a big hit. Stick to your principles — and be flexible.

Since the stock market’s coronavirus-related meltdown, I’ve tried to avert my eyes from the train wreck that doubles as my family’s retirement plan—brokerage account, 401(k), Roth IRA, you name it. My next meet-up with our financial adviser will be a first: a virtual session. I tend to like to do these things in person, but that’s changed for now, thanks to … well, you know.

I’m sure the planner will have some nice gloss to paint on things, but we all know that thousands of dollars have fallen away from what we planned to spread out over our retirement years. What to do?

Review your Social Security strategy. Social Security will likely be a pivotal part of your retirement income. That’s why it’s important to plan when you’re going to start drawing from it. The good news is that it’s a constant; that part of your income will not go down. You can start taking it at age 62, but your benefits will be permanently reduced by 25% or more. Full retirement age, when you’ll get your full benefits, is 66 if you were born between 1943 and 1954. If you can afford it, wait until age 70 to claim benefits. Social Security benefits increase 8% a year if you wait until then to take them.

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Consider a Roth conversion. If your retirement savings are heavily invested in tax-deferred accounts, such as 401(k)s and IRAs, you may want to take advantage of their diminished value and convert to a Roth IRA. You’ll pay the taxes now instead of in retirement, and your tax bill will be based on the value of your account when you convert.

“Let’s assume that you were planning to convert $100,000 in 2020 and that $100,000 is now worth just $70,000,” says Evan T. Beach, wealth manager at Campbell Wealth Management. “Converting the lower amount will not only lead to a lower tax bill but also allow the $30,000 rebound, whenever it comes, to be tax-free.”

Delay major expenses. Financial advisers say we should put the brakes on major expenses, including kitchen and bathroom remodels, while we give our portfolios some time to recover. If you’re already retired, putting those expenses on hold will help you avoid taking withdrawals from a depleted portfolio. And if you’re close to retirement, you’ll be able to increase the amount you’re saving.

I’m still driving my 2009 Honda Accord, which I bought new in January 2010. This is by far the longest I’ve held on to a car, and the itch for something new and a bit flashier is palpable. But we have a newer car in our family, which my wife drives. And I don’t really travel that far or even daily in my Accord. I’m putting what would have been a monthly car payment to better use—including saving more for retirement.

Follow the 4% rule. If you’re a near-retiree or recently retired and you have a well-balanced and diversified portfolio, you should be in a good position to use a strategy known as the 4% rule.

It works like this: You withdraw no more than 4% of the beginning balance in your savings every year. Increase the amount of your annual withdrawal by the previous year’s inflation rate. For example, if you have a $1 million nest egg, withdraw $40,000 the first year of retirement. If inflation that year is 2%, in the second year of retirement you boost your withdrawal to $40,800. If inflation jumps to 3% in your second year of retirement, the dollar amount for the next year’s withdrawal also rises by 3%, to $42,024. This formula has its critics—some think it’s overly conservative, while others believe it’s too risky—but it has held up through other tumultuous periods, including the Great Recession of 2008–09.

Bob Niedt
Online Editor,

Bob is a Senior Online Editor at He has more than 40 years of experience in online, print and visual journalism. Bob has worked as an award-winning writer and editor in the Washington, D.C., market as well as at news organizations in New York, Michigan and California. Bob joined Kiplinger in 2016, bringing a wealth of expertise covering retail, entertainment, and money-saving trends and topics. He was one of the first journalists at a daily news organization to aggressively cover retail as a specialty, and has been lauded in the retail industry for his expertise. Bob has also been an adjunct and associate professor of print, online and visual journalism at Syracuse University and Ithaca College. He has a master’s degree from Syracuse University’s S.I. Newhouse School of Public Communications and a bachelor’s degree in communications and theater from Hope College.