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VIEWER Q&A: What to do about your retirement and savings amid the pandemic

The novel coronavirus pandemic has rocked the U.S. stock market and led to increased unemployment and financial hardships for many Americans.

For those who are age 60 or older, whether they are retired or not, COVID-19’s impact on personal finances can be particularly stressful.

Teresa Ghilarducci, a retirement security expert and professor of economics at The New School for Social Research, joined PBS NewsHour’s William Brangham to answer your questions about personal finance during the pandemic.

Watch the video player above for answers to your questions about retirement plans and finances in the midst of the coronavirus pandemic.

Should I pull money out of my retirement savings?

For many people, it’s very tempting to dip into retirement savings and a 401(k) as daily budgets begin to tighten and for some, jobs were lost amidst the pandemic

Ghilarducci, however, recommends you “leave your retirement savings in place” as much as possible.

For most people, a 401(k) includes stocks and bonds, and since the market is in a downturn, Ghilarducci said pulling out savings now is essentially “selling low.”

“You’re going to take it out in the worst possible market situation,” she said.

In fact, it’s a good time to increase your savings deposits and retirement contributions, if possible, since those investments will give you better returns when the market becomes less volatile.

She also suggested checking your balances with the future in mind.

“Look at your balance, but bring your long-term self to the table,” said Ghilarducci. “Leave your scared, short-term self on the couch.”

Should I keep working, or retire now?

As long as it’s safe, Ghilarducci recommends anyone who can still work, should keep working during this time, as long as they can.

“Keep working, keep collecting your income,” she said.

Waiting as long as possible can make your monthly social security checks bigger as well as give you more opportunity to save money.

Older workers should also ask their employers about keeping up their contribution to their retirement plan, even in these times of financial difficulty.

Ghilarducci said the biggest issue for older Americans isn’t exactly unemployment, it’s the lack of sufficient income and increased healthcare costs.

Should we refinance credit cards and mortgages?

“Every creditor is waiting on that phone call,” Ghilarducci said.

While it’s definitely a good time to consider refinancing interest rates for credit cards and mortgages, there are a couple things to keep in mind.

Refinancing a mortgage might extend your payment time, which means you’re paying more interest, even with a lower rate.

Ghilarducci also said it’s a bad idea to defer payments, since that may save some money now, but will increase monthly costs in the future.

She said, unless you like to give money to your bank, it’s best to “just try to ride it out,” especially if you already have a good interest rate.

“Don’t love banks, they don’t love you back,” she said.

Who should I speak to for financial advice?

Financial advice can help guide important life decisions, but Ghilarducci cautions everyone to watch out for consultants who don’t have the right credentials.

Ghilarducci recommends asking a financial planner about their financial motives before taking advice, and to make sure to seek out a certified financial planner, or CFP.

“Do you have a fiduciary standard when you give me advice?” She recommends asking. “If they say no, run.”

What do I do if I don’t have enough retirement savings?

Many Americans have not had the opportunity to set up a retirement investment account or put sufficient money into their savings, leaving them vulnerable when they can no longer work.

According to the Social Security Administration , the average social security payment was $1,429 per month in 2019. Ghilarducci said that’s not going to be enough.

“Most people have very little to nothing in their retirement accounts,” she said. “And that’s a shameful aspect of our failed retirement system.”

She emphasized that, for most people, the state of their retirement savings was caused by things completely out of their control, even though the blame often ends up falling on the individual.

How do we know when the economic downturn bottoms out?

Ghilarducci said the American economy likely has further to fall before the pandemic is tamed and businesses can reopen.

“This economy has a ways to go,” she said.

Ghilarducci predicts the unemployment rate may double in April, and points to the latest figures from Goldman Sachs, which denote a startling decline.

Goldman Sachs “has just doubled their prediction for the decline in GDP, which is 34% for these next couple months, which is what happened in the Great Depression over three years,” she said.

Ghilarducci pointed to the price-earnings ratio, which calculates the value price of an asset over its potential earnings. Currently, the overall stock market P/E ratio remains stable, but the number will likely shrink as the pandemic continues to affect the economy.

Overall, Ghilarducci doesn’t believe we’re yet at the bottom, given expert forecasts.

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