6 Ways the Pandemic Has Been a Dress Rehearsal for Retirement – and How You Can Take Advantage
What do lockdowns and retirement have in common? Quite a bit. And the parallels can be helpful in your retirement planning.


Uncharted territories are difficult to navigate, but what if you had the ability to do a test run for one of life’s most important milestones – retirement? This pandemic has been just that in more ways than one.
Families, schools and businesses have been left feeling whiplashed by the efforts of government and officials as they close, re-open and re-close aspects or our economy and our daily lives. The global pandemic has tested our true grit on so many levels as a nation and economy.
It is also shining a spotlight on many of the areas where we have done a good job at preparing for retirement … and some areas that still need some work.
As the saying goes, the show must go on. The good news is if you’re not retired yet, then there’s still time to make some changes.

1. Get a plan in place for how you will fill up that extra time
You may be finding yourself working on various home projects, taking on new hobbies, or reviving old ones during the lockdown. What has been your experience? Maybe the initial thought of a wide-open schedule and an unplanned day sounded exciting, but it turned out to be unfulfilling and boring. Or maybe it was heaven.
Figuring out what to do with all the extra time you’ll have during retirement to live a purposeful and meaningful life is just as important as figuring out how you’ll allocate your money.

2. While you’re at it, figure out how you’ll deal with more ‘togetherness time’
As a result of the shutdowns and stay-at-home orders, families and loved ones had nowhere to go and were forced to spend more time together. This presented a unique opportunity for families to find meaningful engagements in relationships that were often pushed aside or hurried as a result of everyday life demands. On the flip side, coronavirus has amplified problems between some couples as they’ve been stuck in close quarters and forced to confront compatibility issues and navigate the unique problems of the pandemic. In fact, divorce rates have skyrocketed amid coronavirus, and 31% of couples admitted the lockdown has caused irreparable damage to their relationships.
Stress levels will hopefully not be as high during retirement as they are now, but couples should similarly expect more time spent together and garner a sense of what that means for their future — whether positive or negative.

3. Drill down to what you actually need
With the economy shut down and many areas faced with stay-at-home orders, we’ve been forced to hunker down and focus on what we need to survive. The common epiphany shared by many is that, well … we don’t really need all that much. You probably noticed that besides food, housing and utility costs, there wasn’t much else you needed.
If you were lucky enough to transition to telework, your transportation costs likely declined. And shopping for business attire and dry-cleaning bills? Those costs likely plummeted as well. There are expenses that may well increase in retirement — like medical bills — so take this time to note how your spending has changed throughout the pandemic. It should give you a good indication of what you really might need to get by in retirement.

4. Keep some dry powder
This pandemic has also highlighted more than ever the importance of having a cash cushion for emergencies. When an unforeseen expense occurs, it’s best to have three to six months’ worth of expenses in a liquid account. This is no different during retirement.
It’s especially helpful to have a cash cushion when your investment accounts take a dip and you’re best off pausing distributions from these accounts. Being dynamic with your distributions and temporarily bridging expenses from savings will allow your portfolio time to recover.

5. Crunch the numbers
Whether you’re furloughed, searching for employment or are a business owner re-working your strategy, you’ve probably been forced to look at how long you can manage all your bills, given how much you currently have. Although not an exact science, calculating your retirement is much like that.
Regardless of whether you’re living off a 401(k), pension, Social Security and/or investment income in retirement, you’ll need to weigh your current investment income plus expected future income against your annual expenses.

6. Protect your portfolio
If you’re nearing retirement, this last bout of market volatility probably made you acutely aware of how market shocks can impact your carefully laid-out plans. It likely also underscored the importance of managing risk as you get closer to retirement.
Luckily, we’ve seen a rapid recovery in the markets — this time — but take this opportunity to revisit your portfolio allocation to make sure that your risk is aligned with your goals and time horizon. Sometimes there are no second (or third) chances.

Finally, think on your feet
Being flexible and able to adapt to the world’s uncertainties is always a great strategy. Having the ability to pivot and re-tool their finances is helping individuals, families and businesses survive right now. Everyone’s path to retirement looks different. But a test run is one thing that will certainly help you run the show as you get closer to that date.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Julia Pham joined Halbert Hargrove as a Wealth Adviser in 2015. Her role includes encouraging HH clients to explore and fine-tune their aspirations — and working with them to create a road map to attain the goals that matter to them. Julia has worked in financial services since 2007. Julia earned a Bachelor of Arts degree cum laude in Economics and Sociology, and an MBA, both from the University of California at Irvine.
-
September Fed Meeting: Live Updates and Commentary
The September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
Ask the Editor: Questions on 529 Plan Rollovers to a Roth IRA
Ask the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your Wallet
Interest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your Investments
Don't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can Help
Artificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial Planner
Holding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their Communities
Credit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth Adviser
From how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
The Risks of Forced DST-to-UPREIT Conversions, From a Real Estate Expert
Some new Delaware statutory trust offerings are forcing investors into 721 UPREIT conversions at the end of the hold period, raising concerns about loss of control, limited liquidity, opaque valuations and unexpected tax liabilities.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps It
The Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.