Planning for Retirement in the New Normal of Covid-19
Here are four ways we all need to adapt to keep our financial plans on track as the nation grapples with the coronavirus pandemic.


There is a lot of talk these days about the “new normal,” which might be more accurately described as not normal. COVID-19 has impacted many aspects of our daily lives and if you’re nearing or in retirement, you may be wondering if it will impact your retirement plan. Below are a few items to consider as we navigate these uncertain times.
1. Understand the impact of sequence-of-returns risk
Given the market volatility that has accompanied the pandemic, retirees and pre-retirees should take sequence-of-returns risk into consideration to help preserve their portfolio’s value and ability to recover from a downturn. Sequence-of-returns risk refers to the possibility that you’ll have to withdraw funds at the same time your portfolio is losing value. Because you have to sell more shares to get the same amount of cash, you’re left with fewer shares to compound in the future.
You can reduce the impact of sequence-of-returns risk by reducing your withdrawal rate during a downturn and focusing the withdrawals you do make on cash and other less-volatile assets.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tips:
- The Schwab Center for Financial Research (SCFR) recommends that you keep a year’s worth of expenses in cash, and another two to four years’ worth in assets that can be easily liquidated.
- If you find yourself caught in the middle of a downturn, be strategic about your withdrawals. Focus first on cash, maturing bonds and CDs and other less-volatile investments. If you need to draw on growth investments, consider sales that are needed for portfolio rebalancing and investments that no longer meet your goals.
2. Increase contributions, decrease distributions
For the second year in a row, the IRS has increased contribution limits for 401(k)s by $500, allowing you to contribute up to $19,500 in 2020, and $6,500 in catch-up contributions for investors age 50 or older. You can also contribute $6,000 to an Individual Retirement Account (IRA), and an extra $1,000 in catch-up contributions if you’re age 50 or older.
Meanwhile, the new CARES Act allows for waivers on required minimum distributions (RMDs) for 2020. This means retirees can keep their investments in the market longer, potentially increasing their value over time and avoiding the withdrawal of funds during a low point in the market.
Review both of these changes and determine if you can use them for your advantage.
Tips:
- Max out your retirement contributions if you can.
- Avoid taking unneeded withdrawals from retirement accounts in 2020.
3. Revisit your estate plan
COVID-19 has increased uncertainty across all aspects of life, highlighting the importance of planning. After ensuring your assets are secure, it’s also important to make sure those assets go where you want them to, whether to your family, your favorite charity or both.
Estate planning can help organize things during both life and death. Take steps to make sure the needs of you and your loved ones are secure.
Tips: Meet with an estate-planning attorney to…
- Ensure you’ve updated your beneficiaries and other estate-planning documents.
- Discuss a gifting strategy for your assets.
- Consider your charitable giving options.
4. Give virtual financial planning a try
Companies are focused more than ever on making it easier for you to manage your finances virtually. Many transactions that used to require an in-person visit — such as check deposits — can now be completed through your mobile device.
There are also virtual options for financial planning including online tools, consultations by phone and video appointments. If you don’t have a financial plan, consider one of these options to help establish one. If you have a plan in place, this may be a good time to review or update it, especially if you’ve had lifestyle changes or unexpected expenses.
Tips:
- Familiarize yourself with your options for managing finances from home.
- Assess how your lifestyle has changed and impacts to your spending.
Investing involves risk including loss of principal. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
©2020 Charles Schwab & Co., Inc. (“Schwab”). All rights reserved. Member SIPC.
Get Kiplinger Today newsletter — free
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.

Joe Vietri has been with Charles Schwab for more than 25 years. In his current role, he leads Schwab's branch network, managing more than 2,000 employees in more than 300 branches throughout the country.
-
Do You Really Need That Wine Cellar?
Home Features Wine cellars are a popular feature in high-end houses. Will installing one in your home increase its value, or would you be better off with a cheaper solution?
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance Agent
Your insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Two Estate Planning Issues You Should Never Overlook
This estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.
-
The Four D's That Could Force You to Sell Your Business
Business owners (or their heirs) can be rushed into a sale of their company if they haven't planned for a major change in circumstances — or the four D's.