Financial Planning During a Pandemic: We’ve Planned for This (A Retirement Plan Reminder in the Midst of COVID-19)

Written by David M. Foreman, CFP® on July 6, 2020

Warren Averett Asset Management Retirement Plan COVID-19 Image

As we continue to navigate the COVID-19 situation, our thoughts and emotions often drift toward concern in several ways. First and foremost, we hope for the physical safety and health of our families, our communities, our nation and the world. For many, there also is concern for financial security due to loss of income or the decline in investment portfolio values. It can be easy to focus on the short-term pain and lose sight of the long-term potential. In uncertain times like we are currently experiencing, it is important to remember that we’ve planned for this.

The temptation is to see the market’s decline for the year to date and to assume your retirement plan has been permanently altered and some different course of action must be pursued. However, when viewed from a long-term perspective, that result most often is not the case. Yes, the losses have been steep, and they have occurred rapidly. That combination can be frightening, particularly when combined with the physical fear related to the virus. Again, pause and remind yourself that we’ve planned for this.

Have Confidence in the Retirement Plan You’ve Already Put into Place

Warren Averett Asset Management takes a comprehensive approach to our clients’ personal finances, and for most of our clients, that means we have carefully and thoroughly planned for your retirement. We perform a retirement analysis on the front end of our relationship with you and your family, and then we update and review it periodically.

For some, you’re developing a plan of action to make your retirement goals a reality one day. For others, you’re already retired, and the analysis is beneficial when reviewing spending, along with the longevity and potential of the portfolio. In any case, remain confident that the plan you’ve created and implemented is one that should enable you to achieve your goals in the long run.

As part of the retirement planning analysis, you’ve seen how the portfolio can grow over time, given a set of assumptions. However, the analysis does not end there. The next step, which is a critical part of a well-designed financial plan, is the Monte Carlo analysis and stress testing of the portfolio. This step brings volatility into the picture and considers many iterations with differing rates of return. Even though the cause (i.e., the COVID-19 virus) of this market volatility is different from what we’ve seen historically, the type of market that we’ve been experiencing lately would fall within the parameters of your plan.

In other words, if your retirement plan has looked solid to this point, the recent losses should not have derailed or significantly altered your situation. Again, we’ve planned for this.

Hopefully, this reminder brings you some peace of mind in the midst of an uncertain time. This comfort can be beneficial for all, but particularly for those who have recently transitioned into retirement—or who are planning on retiring very soon.

Your Retirement Planning Moving Forward

You’ve likely heard the suggestion a few times in recent months, but it is important to focus on the things you can control. This focus applies to the spending, portfolio withdrawals, and investment strategy assumed in your retirement planning.

If you remain consistent with the assumptions in those areas, in the long-term you should stay on track with your plan.

If you have any questions related to your retirement planning, please contact your advisor or request a member of our team reach out to you. We hope you and your families stay safe and healthy.

David Foreman serves as a Member, as Director of Financial Planning and as a Senior Client Consultant with Warren Averett Asset Management. Click here to learn more about him or to reach out to him directly.

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