There have been a lot of financial stressors since the pandemic started, with some people even worrying how they will manage week to week. However, the long-term consequences are also weighing on people’s minds, particularly how a career slump this past year could impact retirement plans.
Anne Tergesen delved into this for the Wall Street Journal, arguing it might not actually be as damaging as people fear. Tergesen compares it to people who take career breaks to further their education or take care of their newborn child.
A work hiatus is not anything unusual for a person to deal with. This time it is just understandably more jarring because no one included an interruption from a virus in their plans.
The Bureau of Labor Statistics says that in February of 2020 there were 5.7 million people unemployed in this country. A year later? That number has risen to 10 million.
For workers already nearing retirement age it is anticipated a job gap now likely would not be too devastating assuming they have steadily been saving throughout their life. Whereas younger people in the prime of their career stand to miss out on some crucial years to build their finances.
One method Tergesen recommends to offset this is to start investing in a Roth individual retirement fund once it’s possible to save again. She argues these accounts allow you to withdraw tax and penalty free, making them ideal for savings and emergencies.
Realistically though, getting back on track with saving might just require a change in perspective. Having to postpone retirement a few years, or rein in lifestyle activities is not something most people want to do.
However, what’s important is to realize the pandemic will not ruin your ability to retire. It may require adjusting your expectations a bit, but many others are in that same boat with you.
For more information about your potential retirement concerns, be sure to read the Wall Street Journal’s article here.