After more than a year of the pandemic, a lot of people have felt their finances pinched. That's especially true for those who were hoping to retire, only to find they may have to wait. A new Fidelity survey finds nearly 80% of Americans fear the pandemic has taken such a bite out of their retirement plans, that they expect to have to work longer than anticipated.
It offers a reminder of why its so important to plan for emergencies.
"The majority of individuals are going to have to rethink retirement; not only work longer, but rethink their lifestyles," says Houston financial planner Rich Rosso, who has long believed that a 'traditional retirement' is tough, these days. The financial strain, that came with the pandemic, only made it more so.
The Fidelity survey finds many Americans believe it will take them between two and three years to get their retirement plans back on track. Rosso thinks pandemic belt-tightening will present an opportunity to turn financial survival skills into savings skills, for emergencies.
"I'm not saying it's easy; I'm not saying you don't have to make some changes to do it," he says. "I still think it's applicable to have 12 months of living expenses, in cash."
It's a lot more than traditional recommendations: A year's worth of expenses, socked away for emergencies. Getting it done is a long term effort, that could take a couple years. Without it, though, emergencies could mean tapping into retirement accounts, or credit cards, with steep financial costs.
Consumers may be getting the message. A separate Ameriprise survey finds nearly two-thirds of Americans have been prompted, by their pandemic experience, to find a way to save. Rosso hopes the sentiment sticks. Without it, he fears financial stability may be difficult to find.
"You have to prioritize where you're putting your money, and until you have that financial vulnerability cushion in place, you're not safe," he says.
So, how to start saving that kind of money? As many of us have trimmed our expenses, over the last year, the best way is to maintain those habits. Additionally, as more money comes into the household, don't spend it if you don't have to. Instead, direct it into savings to use it when and if you need it.