The COVID-19 pandemic is unsettling, and this feeling likely extends to your finances. While the dramatic market moves may leave you reeling—especially those on the cusp of retirement—you may be wondering, “what should I do?”

First and foremost: don’t panic. What’s happened in the market—and, subsequently, your portfolio—has already occurred. Reactionary investing can lead to unnecessary worry and, possibly, increased portfolio volatility.

If you are planning for retirement:

  1. Don’t make any sudden moves; a stable hand can help make the most of potentially difficult situation
  2. Plan accordingly

Mind your timeframe

Many who are approaching retirement can breathe a sigh of relief. For most soon-to-be-retired investors, the majority of your portfolio will likely have transitioned out of stocks and into annuities and other fixed income-driven investments.

Potential benefits of bonds and other fixed income products include:

  1. Stronger likelihood of shielding assets from some of the current market uncertainty
  2. Modest but possibly more stable returns

Do your current positions provide the funds necessary to maintain your lifestyle?

Holdings in equities and securities may not quickly rebound to their previous highs, meaning these investments may not carry you as far into retirement as you once thought. In this case, you may want to reassess both your portfolio and goals.

Speak with a financial professional to develop a comprehensive plan for your existing portfolio and determine where the best value propositions are for the time you have left in the market.

Don’t pull from your nest egg

If you have more time until retirement, there is even less need to panic. Your IRA, 401(k), and other retirement accounts will have time to react and rebound should the market improve. Withdrawing from these accounts should be a last resort. Paying the significant penalties could cause problems as you consider reinvesting or reopening accounts and may put you at a disadvantage come tax season.

Assess the advantages of new legislation

The government’s COVID-19 response includes several new initiatives as well as revisions to existing rules around retirement savings and distributions.

The CARES Act and the 2019 SECURE Act both changed existing rules on required minimum distributions (RMD). The SECURE Act increased the RMD age to 72 and the CARES Act removed the RMD entirely for 2020.

Depending on your circumstances, these changes could be moot.

For some, maintaining annual distributions may be the best strategy, particularly if you need money now and distributions make up the majority of your retirement income. However, you may want to keep the funds in your retirement accounts if you can afford to do so. Work with your financial professional to better understand which option might be the best for you.

Whichever path you take, remember: The best approach is a steady one. Invest based on your goals rather than fears.

To access additional financial education resources to help you as you prepare for retirement, visit our Financial Education Center.


This article is for educational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and particular needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought. 

There is no assurance that any investment, financial or estate planning strategy will be successful. These strategies require consideration for suitability of the individual, business or investor.

Investing involves risks and you may incur a profit or a loss. Asset allocation/diversification cannot guarantee a profit or protect against a loss. Past performance cannot guarantee future results. 

Opinions, estimates and projections constitute the judgment of Wilmington Trust and are subject to change without notice.

Third-party trademarks and brands are the property of their respective owners.


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