Skip To Content

Time for a reality check: Are you still on track to meet your goals?

The pandemic turned our daily routines upside down. These questions can help you see whether your finances held up — and whether you might need to adjust them.

 

IT’S HARD TO COUNT ALL THE WAYS life changed as a result of the pandemic: Many of us continue to work remotely, help our kids with virtual learning, reschedule canceled vacations and finally resume our interactions with friends, all in an effort to return to some sort of new normal.

 

As a result, financial questions loom large: How are our investments holding up — and should we be adjusting them as well? Will we still be able to live the life we want in retirement?

 

Like many others, Terese and David Zingg were concerned in spring of 2020 when the virus spread and the stock market began to wobble. The couple, from Gloucester, Massachusetts, were especially nervous because David, 66, had already retired as a sales manager at a local boatyard, leaving them to live on Terese’s salary alone.

 

But after long conversations with Mary Mullin, their Merrill Wealth Management Advisor, they emerged more confident in their financial strategy. “We talked through cash-flow models and tactical shifts, such as selling some investments to raise enough cash for the short term so that they wouldn't have to worry,” Mullin says. The Zinggs also revised travel expenses downward (not too hard, with much of the world shut down at the time). “Even in the darkest days, we felt our plan was solid,” Terese says. “We knew we had planned the best we could.”

 

Whether you’re still working or already retired, you probably share some of the same concerns the Zinggs had. To see how your financial plans have weathered the economic effects of the pandemic, start by asking your advisor the following questions. Then discuss what steps you might want to consider to keep your plans on track as the economy — and your daily life — gradually rebounds.

 

Still working. A woman sits at a desk flipping through paperwork.

Do I need to save more to be able to retire at the age I want?

The first step in figuring out how the pandemic may have affected your retirement readiness is to do a reality check: “Ask yourself: Are you on track or off track and to what degree?” says Joe Curtin, head of portfolio management for the Chief Investment Office, Merrill and Bank of America Private Bank.

“Staying invested helps to ensure that you can take advantage of any market bounce that may occur.” 

— Joe Curtin, head of portfolio management for the Chief Investment Office, Merrill and Bank of America Private Bank

 

Many people have experienced some form of financial pressure, whether due to furloughs, layoffs, reductions in pay or small businesses suffering in the disrupted economy. Your advisor can help you assess where you stand to help you manage immediate financial challenges.

 

Next, look at your investments — but don’t make any sudden moves. “Staying invested helps to ensure that you can take advantage of any market bounce that may occur,” Curtin points out. If you find you’ve fallen behind in your progress toward saving for retirement, think about increasing contributions to your retirement plans as soon as you can afford to do so.

 

Ideally, you should be taking full advantage of a company match, notes the Zinggs’ advisor, Mary Mullin. The federal Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in 2019, made a number of changes to encourage retirement saving. To learn more, read 10 things you need to know about the SECURE Act.

“If you want to reduce your expenses, you could look for ways to refinance any debt you hold at today’s record-low interest rates.”

 

Another option is to consider delaying your retirement by a couple of years to extend the amount of time you have to save, says Mullin. “Postponing retirement by two or three years can create extra cash flow, delay withdrawals, change the retirement math and give you a lot more confidence.” (For further ideas, read Save more for retirement with these five tips.)

 

What about my other financial goals?

To stay on track to meet your other financial goals, work with your advisor to make sure you’ve prioritized them correctly, says Curtin. Organize them in three different spending buckets — essentials (things like maintaining a minimum lifestyle, an emergency fund and covering medical costs), important goals (like helping grandchildren pay for education or maintaining your philanthropic giving) and aspirational goals (true luxuries like art collecting or buying a second home). Particularly within the last two categories, you may find places to cut back. “This is a great time to talk with your advisor and re-evaluate your priorities,” Curtin notes. Together you can look for trade-offs and creative ways to temporarily restructure your assets, saving strategies and expenses to help meet your needs.

Subhead reads: Already retired. A man sits on his bike in the woods.

How can I maintain a consistent stream of income?

A solid retirement plan focuses on cash flow, says Mullin: “It’s not necessarily about when you have X dollars in the bank — it’s about do you have the cash flow each month to live the life you want to live?” Ask your advisor to review all of your sources of cash, which can include Social Security, pensions, part-time work and dividends and interest from your portfolio. If you’re worried that recent volatility may have reduced the value of the funds you can draw on for your income needs, you may want to consider increasing your holdings of dividend-paying stocks, says Mullin. Though some companies suspended dividends during the pandemic, generally dividend stocks have the potential to provide a reliable source of income.

 

Are there ways to reduce my income needs in retirement?

If you’re worried about outliving your retirement savings and want to reduce your expenses, you could look for ways to refinance any debt you hold at today’s record-low interest rates. Consolidating your credit card balances at a lower rate, for instance, could help you pay them off faster. Or you might look into refinancing your mortgage. A lower monthly mortgage payment could help you pay off other higher-interest debt and give you more cash to put toward other expenses. “You might also consider downsizing to a smaller home, potentially moving to a lower-cost locale and pocketing the difference to help cover monthly expenses,” suggests Mullin.

 

Subhead reads: A question everyone should ask. A man and woman sit at a kitchen table looking at a laptop.

Are there investment opportunities I can take advantage of now?

There’s no question the economy was hit hard by the pandemic, says David Koh, senior investment strategist with the Chief Investment Office, Merrill and Bank of America Private Bank. But the U.S. equity market, buoyed by government stimulus and resilient consumers, has rewarded investors that stayed the course.

 

As economies, states and municipalities reopen, we anticipate increased spending on services and supply-chain constraints to ease. This should drive both top-line and earnings growth, particularly for businesses that are making investments to boost their productivity. We continue to advocate a balanced approach between value and growth, as well as having exposure to small cap equities. “From a sector standpoint, cyclical parts of the economy such as industrials, chemicals, financials and energy will be important contributors to driving returns, along with technology, through the rest of the year,” Koh notes.

 

Whatever the new normal brings, adds Curtin, there’s one clear takeaway from the events of 2020 — the value of regularly reviewing your strategies with your advisor. As the economy and the markets continue to recover, volatility likely will continue — and investment opportunities may emerge. Having someone to guide you through the ups and downs can help you keep your plans on track.

 

Connect with an advisor and start a conversation about your goals.
1.866.706.8321
9am - 9pm Eastern, Monday - Friday
Have questions for your financial advisors?
Connect with to continue the conversation

Information is as of 09/03/2020.

 

Opinions are those of the author(s), as of the date of this document and are subject to change.

 

Investing involves risk including possible loss of principal.

 

Past performance is no guarantee of future results.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation.

 

Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.

 

Banking, mortgage and home equity products offered by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation. Equal Housing Lender. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.

 

Dividend payments are not guaranteed, and are paid only when declared by an issuer’s board of directors. The amount of a dividend payment, if any, can vary over time.

 

Case studies are intended to illustrate brokerage products and services available at Merrill and banking products and services available at Bank of America. You should not consider these as an endorsement of Merrill as an investment advisor or as a testimonial about a client’s experiences with us as an investment advisor. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary. The investment strategies discussed are not appropriate for every investor and should be considered given a person’s investment objectives, financial situation and particular needs.

 

X

You need to answer some questions first

Then we can provide you with relevant answers.

Get started