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Nearing Retirement and Covid Decimated Your Retirement Account. Now What?

2020 was poised to be a pivotal year – the US was experiencing record low unemployment, foreign trade negotiations remained constructive and the stock market continued to set fresh new highs. While many anticipated it would be a volatile year with the presidential election, few were prepared for a global pandemic and the fallout experienced around the world.

COVID has changed our everyday lives – employment, education, healthcare, transportation, entertainment/sports, family/friendship gatherings have all been affected. Likewise, investment portfolios and retirement accounts were not immune to COVID.

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The stock market, as a whole, hit fresh highs in mid-February. By March 23, 2020, the market recorded the swiftest and sharpest decline in its history. Down roughly 30% in 33 days. As we take a step back and look today, six months later, we see the market is back to its value of pre-COVID times, however, not all investments are trading back at the highs.

So now what? How to chart the path forward from here? Specifically, for those who are nearing retirement, what are the best ways to prepare for the many unknowns while still making plans and living life?


Even if your account is still below the previous highs, will you have an immediate shortfall in retirement funds on a monthly basis? If so, you will need to reassess the timing of retirement. This is likely a tough and unwelcomed decision, but a necessary one. If you are in need of short-term cash to maintain your lifestyle, then delaying retirement and building up an emergency fund is advisable. If delaying retirement is not an option, then we’d look to find other ways to meet your needs, like downsizing and using the equity in your home.

For our clients in retirement we prepare for their income needs in advance so that we are not forced to raise capital at inopportune times in a downturn. Keep in mind, a delay is not a denial…not retiring right now does not mean you cannot retire.


Once you have reassessed your plan to move forward with retirement, you may still find a need to pivot. Pivoting strategically involves valuing your future financial picture as more important than your current wants.

The best example is adjusting your budget. Curbing spending is within your control and reducing large expenditures or skipping that vacation will help a cash flow problem tremendously. By reducing unnecessary spending, you will be able to leave more funds in your retirement accounts while you wait for the market to recover.

Perhaps this has been an unexpected silver lining of COVID. The pandemic forced a reduction in spending on eating out, travel and entertainment simply because those services were not available. As the world slowly starts the return to normal, you may find it most beneficial to retain some of the revised spending habits you cultivated during quarantine.


Lastly, COVID has reminded us that having a plan does not always mean things go according to plan and that is ok. Revisiting your long-term financial plan should continue to be an important part of your investment strategy. Making sure you have a balanced portfolio with an appropriate level of risk is critical.

It is imperative to remember market downturns are common. Historically speaking, 5%+ corrections occur 3.3 times per year on average and are not indicative of future fallout. In recent years, unrelated to COVID, the market dropped >10% in December of 2018 alone before rallying +30% in 2019.

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It is impossible to predict market fluctuations and it is prudent to expect volatility. Downturns can be painful in the short-term especially for those planning to retire, however, using the experience over the last six months is an example of how temporary the pain can be when we are reminded of the long-term plan.

Market corrections are healthy and provide great buying opportunities for investors. As long as your short-term needs are addressed, and your financial plan stays intact then you can remain cautiously optimistic.

Retirement should be the culmination of a job well done. We find that clients experience a significant range of emotions during this transition. The elation of having the freedom to do what you want to do every day instead of driving a business forward or punching a clock is not without the stress of the thought of “earning your last dollar”. That’s certainly an overwhelming combination at any time much less during a global pandemic. The key is keeping your focus on what you can control and staying nimble enough to reassess situations, pivot when necessary and revisit your plan consistently over time.

We can help you navigate the rise and fall of the markets as well as building a financial plan to make sure you are basing all retirement decisions from a place of strength. We will all encounter many unknowns in life and COVID has highlighted the importance of preparing a solid financial foundation.

Have more questions? We can help. Contact us with questions.

Shaunna M. Anderson, CDFA®

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