Retirement During COVID-19: How to Protect Retirement During a Financial Crisis

Retirement planning and preparedness were things that most Americans didn’t do, even before the COVID-19 pandemic. According to Allianz Life Insurance’s January 2020 Retirement Risk Readiness Study, a third of people said they retired before they were ready due to a job loss. And that’s before the coronavirus caused sweeping changes across the economy.

So, is retirement during COVID-19 a good idea? And if you’re already retired or are being forced into retirement in this current economy, how can you protect yourself? If you’ve got questions, don’t worry—we’ve got answers. 

Frequently Asked Questions About Retirement During COVID-19

Can people afford to retire after the economic dip due to coronavirus?

The answer to this question depends on your own financial situation and age. Younger retirees are taking six-digit hits to their portfolios because they have plenty of time to recover. For others, though, the downturn in the markets makes it more lucrative to stay employed for longer. Otherwise, they might be withdrawing funds at a time when selling stocks gets them the least profit.

Ultimately, whether or not you can afford to retire is a personal consideration. To make your decision, gather the following information:

  • How much income you could expect from retirement savings and Social Security if you retired now
  • Your regular monthly expenses, including any bills, medical expenses and necessities such as groceries

If the second number is bigger than the first, you might not be able to afford full retirement right now. Even if the numbers are equal, that might cut it a bit close for comfort.

“Can people retire?” asks Paramount Investor Advisors founder Chris Hardy before answering his own question, “Absolutely. Should people retire? That’s a different story.”

How can you protect your retirement?

Hardy points out that having realistic expectations about cash flow is important in deciding whether to retire at any time. And it’s important to protect your retirement—even outside of a pandemic—with education, preparation and planning.

Some ways you can protect your option to retire now or in the new future include:

  • Getting a handle on debt and paying it down so you don’t have to worry about those expenses in retirement
  • Minimizing what new debt you take on
  • Protecting your credit score so if you do have to take on debt, it’s as affordable as possible
  • Curtailing spending so you can build cash reserves that will help you afford retirement
  • Working with financial advisers to ensure your retirement portfolio and wealth-building strategies are as emergency-proof as possible

Should you update your retirement investment strategy during a time like this?

According to Alexa Serrano, Banking Editor from, it depends on your situation. “The most important thing to remember during this time is to not let fear drive your financial decisions,” says Serrano. “When you’re planning for retirement, the key is to consider your current age and when you plan to retire. As you near retirement, your strategy will change as you’ll want to become a bit more conservative with your risk.”

So, what’s the conventional wisdom for the average person? Financial experts are advising most people to sit tight. “But if you’re going to make a move,” says Serrano, “consider adjusting your risk tolerance as opposed to selling all your investments. You can minimize the impact on your retirement account by adjusting your asset allocation.”

What are some tips for navigating retirement funds during a financial crisis?

Financial expert Suze Orman provides some tips for navigating retirement funds and investing during a crisis. First, she says that you should keep investing if you’re not yet retired—especially if you have a few years to recover. And retirees who already have investments in cash and bonds should keep them there, she says. Second, Orman says you might consider smart use of credit rather than pulling money from retirement savings accounts.

If you have a lot of cash on hand, consider placing it in a high-yield savings account. The returns might not be as high as long-term returns in stocks can be, but they’re much more stable.

How does the stimulus bill help or affect retirees?

Serrano notes that the bill includes a few changes that would apply to Americans with retirement accounts. For example, the bill makes it less expensive for people to take money out of their retirement accounts. Typically, if an account holder were to withdraw money from their IRA account before age 59 1/2, they’d incur a 10% penalty. The bill waives this penalty for withdrawals up to $100,000 until December 31, 2020.

The bill also gives account holders the option to spread out any income taxes they owe on the amount they withdraw over three years. But this change only applies to those who specifically test positive with COVID-19 or are undergoing financial hardship due to the quarantine, such as experiencing layoffs or reduced hours. It also applies to those who have a spouse or a dependent who tested positive for the virus.

Should you take advantage of the no-penalty early withdrawal?

“Dipping into your retirement account should be a last resort,” says Serrano, “even if you’re eligible to withdraw without incurring a penalty. If you withdraw funds from your retirement account, you’ll reduce your balance and in turn your future earnings.”

If you’re simply in need of some extra cash flow to make it through the pandemic, you might consider other options. That can include a short-term personal loan.

Should you agree to an early retirement package?

It depends on what’s included in the offer and whether you can afford to take it. If you retire before you’re eligible for Medicare, you may have to pay large premiums for health care if they aren’t covered in your retirement package, for example. And if you know you’ll need to rely on Social Security to pay monthly bills, remember that you get less per month if you draw Social Security benefits before full benefits age.

Unfortunately, there isn’t a clear right or wrong answer here. Adults who are approaching retirement during COVID-19 must consider all their options and take a realistic look at their finances before making a decision that’s best for them.

You Might Also Like

Rolled up $20 bills sit on a table.
With two stimulus checks under our belts, planning is curren... Read More

March 16, 2021

Personal Finance

A woman sits on a window seat with her young child, who is reaching up to touch her face.
The COVID-19 pandemic has taken a financial toll on nearly all of... Read More

March 16, 2021

Personal Finance

financial productivity
The following is a guest post by Orion Talmay, of Orion’s M... Read More

March 16, 2021

Personal Finance receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

Hello, Reader!

Thanks for checking out We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline,, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of in general and they result in more traffic to us as well.

Our Business Model’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to are also able to register for a free account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Editorial Team