6 Ways to Protect Your Retirement Funds During the COVID-19 Pandemic

April 13, 2021

The coronavirus (COVID-19) pandemic has affected everything in our daily lives, including our finances and expectations for the future.

Here are some tips that will help you feel more confident with the market volatility and managing your retirement funds, considering the current global situation:

    1. Use economic stimulus checks wisely: You may already be thinking about how you will use the latest stimulus check. You may want to use the money to remodel your home or go on a vacation, but have you thought about using the funds it to pay off high interest debts, opening a savings account for your children’s education or an individual retirement account (IRA) with potential to grow on a tax-deferred basis?
    2. Other ways you could use the money wisely is by starting or contributing to an emergency fund. The coronavirus emergency is not over, and it is always good to be prepared for future unexpected events and don’t have to tap into your retirement savings.  This short video explains how to create an emergency fund.

    1. Be patient with the investments in your retirement plan. Volatility is part of investing. Profits or losses are not realized until the investment is sold. For this reason, the strategy for these instruments must be long-term in nature and must take your goals and stage of life into consideration.

In this video, Carlos López Pierluisi, a retirement specialist at Popular’s Wealth Management division, explains that retirement plans have several instruments that help us have exposure to the stock market, such as:

      • Mutual funds
      • Money market fund
      • Bonuses
      • Stocks
      • Balanced mutual funds

    1. Review when you will need the money from your retirement plan and how you will use those funds. If your retirement is years away, you could benefit from maintaining your current investment strategy, which, depending on your risk tolerance, will be more aggressive.

If you have a retirement plan with Banco Popular, you can view your 401K plan through your profile at www.popular.com/401K. For questions or guidance on retirement readiness send us an email at educacionretiro@popular.com.

    1. Avoid withdrawing money from your retirement plan. During market downturns, withdrawing money from your retirement plan could eliminate the opportunity for value to rebound. Also, you would be withdrawing money that has the potential to generate future earnings, dividends, and interest, thus limiting the amount you will have available when you retire. To the extent possible, you should exhaust other options, such as federal government relief, emergency funds, or other bonds or royalties. This way you will have a strong fund when you retire. Watch this educational video from our retirement specialist on time and risk tolerance in a retirement plan.

    1. Maintain or consider increasing your contribution to the retirement plan if your budget allows it. Consistently contributing to your retirement plan, as much as you can, will increase the funds available for your retirement and maximize the opportunity to participate in the markets during a long period of time.

For more tips on managing your finances, go to https://www.popular.com/en/services/financial-planning/ or https://blog.popular.com/en/category/your-money.

The information and general descriptions contained in this article are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investment in your retirement plan. All descriptions included are solely for informative and educational purposes for your own independent consideration. This information is not to be considered as counseling or suggestions to take (or refrain from taking) any particular action. By providing this information, we assume that you can assess the general information and descriptions contained herein to apply your own judgment. This document was prepared for informative purposes only and should not be construed as advice of any kind. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates do not provide legal, accounting or tax consultancy services. If legal, accounting, or tax consultancy services are required, you should seek the services of a competent professional. Investment products are not insured by the FDIC, are not deposits or liabilities, are not guaranteed by Banco Popular, its subsidiaries or affiliates, and may lose value. Insurance products are not insured by the FDIC or any other federal government agencies, are not deposits or liabilities, and are not guaranteed by Banco Popular, its subsidiaries or affiliates. Some insurance products may lose value.