Any major crisis will have a lasting impact on societies’ socio-economic status, values, and norms. In some instances, it will require some drastic and even uncomfortable interventions, namely, to change one’s behaviours and customs, and re-aligning one’s priorities to the “new normal” emerging from the crisis.
The COVID-19 crisis of 2020 is no exception, in fact of all the major global crises since WWII it is setting the new benchmark in socio-economic disruption, it only not has posed a major health threat to infected people and stretching the capacities of healthcare facilities and support, but governments’ actions of restricting social and economic activities to stem the tide of widespread infections across regions and countries have had a major global economic impact, and in the process thereof eroded employment, income security and wealth on a large scale.
Retirees were not spared at all – in many instances they are perhaps the worst affected, not only because of the heightened health risk concerns but the financial risks of a sharp market downturn and corresponding value destruction to the sustainability of their retirement plans.
What does a major crisis and some decline in valuations mean financially to a retiree? Should one just sit it out, wait for “normality” to return and valuations to recover? Often “yes”, but it is not necessarily the whole truth. In many instances, retirees should re-assess their personal situations, re-prioritise their spend, seeking ways how to reduce their living expenses, and re-visit their retirement plans. There is no guarantee that markets will return to its pre-crisis levels soon, and while the retiree is funding her expenses from her reduced retirement assets, the recovery may be slow, and the value destruction following the crisis may seem permanent.
Source: Crisis_retirementplan
