retirement planning

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.


  • 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.


  • 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.


  • 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.

About the Author

Joe Vietri, Charles Schwab

Branch Network Leader, Charles Schwab

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.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
9 Great Growth ETFs for 2022 and Beyond

9 Great Growth ETFs for 2022 and Beyond

These growth ETFs offer exposure to higher-risk, higher-reward stocks while lessening the risk of a single stock torpedoing your returns.
January 18, 2022
The 10 Best Closed-End Funds (CEFs) for 2022

The 10 Best Closed-End Funds (CEFs) for 2022

These high-yielding CEFs won't just significantly boost your portfolio income. They'll also allow you to buy their underlying stocks and bonds at a di…
January 12, 2022


Who Should Consider an Annuity (and Who Shouldn’t)

Who Should Consider an Annuity (and Who Shouldn’t)

While annuities can be complicated, the decision about whether one is right for you doesn’t have to be. Some folks are clearly better candidates for a…
January 28, 2022
12 States That Tax Social Security Benefits
social security

12 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in one of these states, your Social Security benefits may be subject to state taxes.
January 27, 2022
Yes, Our Parents Are Aging, But We Can Help
personal finance

Yes, Our Parents Are Aging, But We Can Help

While we can’t stop time, we can help our parents prepare for their next phase with some honest talks. You’ll be glad you did, and you may even have s…
January 27, 2022
7 Financial Planning Strategies for Your Own ‘Great Resignation’

7 Financial Planning Strategies for Your Own ‘Great Resignation’

Anyone itching for a career change is in good company right now, but they need to think a few things through before taking the leap.
January 26, 2022