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How Will Coronavirus Affect Your Retirement Plan?

Recently, coronavirus has been a dominant topic of conversation, not only among health professionals and families but also the business community. 

 

While the number one concern with this virus is obviously health--financial, IT and other industry leaders are also concerned with how the coronavirus outbreak will affect global financial markets. If you’re planning for retirement or already in retirement, you may be wondering, “how does coronavirus affect my personal retirement plan?”

The spread of a novel virus is scary, but it shouldn’t be a cause of financial concern for retirees or anyone thinking about retirement planning. In this post, we’ll tell you why.

What You Need to Know About Coronavirus

Coronavirus (COVID-19) is a respiratory infection with symptoms that include fever, cough, and difficulty breathing, with the potential for serious respiratory illness and death. It’s spread from person-to-person much like the common cold. The first cases happened in the city of Wuhan in December 2019, possibly linked to a local seafood market.

To date, coronavirus has caused almost 3,000 deaths and affects at least 44 countries and territories around the world. There have been more than 80,000 confirmed cases in just a few short months.

The situation continues to develop rapidly, with governments and health organizations working around the clock to take appropriate measures:

  • Much of travel within China’s Hubei province, where the majority of cases have been confirmed, has been shut down and public transportation is not running
  • The CDC’s Travel Health Notices warn travelers to avoid all nonessential travel to South Korea and the People’s Republic of China (this does not include the Special Administrative Regions of Hong Kong and Macau or the island of Taiwan) and to practice enhanced precautions when traveling to Iran, Italy, or Japan
  • U.S. has government suspended entry of foreign nationals who have been in China within the past 14 days
  • U.S. citizens, residents, and their immediate family members who have been in Hubei province and other parts of mainland China are allowed to enter the United States, but they are subject to health monitoring and possible quarantine for up to 14 days

If you’re planning to travel soon, be sure to check the U.S. Dept of State and CDC websites for travel advisories and take reasonable precautions for staying healthy

What Does a Coronavirus Epidemic Mean For My Investments?

At Wealth Legacy Institute, clients often ask us – how do global events (such as natural disasters, pandemics, or changing economic conditions) affect the stock market? 

Generally, when such things happen, markets can experience short-term dips. In the long run, however, the impact seems minor on your personal retirement plan. 

Ultimately, there are multiple factors at play in determining the direction of financial markets, such as the overall health of the global economy, and the amount of fiscal stimulus applied by federal governments.

Here are a few other reasons why the threat of a coronavirus epidemic may have little long-term impact on your retirement plan: 

It will likely be contained - We can take comfort in that past disease outbreaks have been contained before they could have a significant impact on the global economy or the stock market. Scientists are also working on a vaccine to prevent future outbreaks.

History is on our side - Past scares with harmful viruses like Zika and Ebola have taught us that historically, markets tend to recover fairly quickly after disease outbreaks. In many cases, markets rebounded within as little as a single financial quarter.

The bandwagon effect is real - The public typically tends to overreact to events, which can cause alarmist reactions in the market. Remember, any sudden moves are typically short-lived and quickly balance out. 

The Best Retirement Plan Can Handle Ups and Downs

As financial advisors, we tell our clients that a good personal retirement plan is built to withstand challenges. A smart financial plan is resilient because it’s diversified. A mix of stocks, bonds, and cash means your retirement plan is designed to minimize risk over the long-term. 

When unexpected circumstances arise it can be unnerving, especially when you’re trying to plan for your future. Rest assured, though, there’s no need to panic. 

When you work with a financial advisor, they’ll help you create a long-term plan based on your individual financial and lifestyle goals. So, you don’t have to worry every time something comes up, such as a political or natural disaster. Instead, you’ll be able to confidently tune out the noise and stay the course.

If you’re ready to create a retirement plan that won’t crumble under outside pressures, check out our free 2020 Guide to Retiring in Denver

2020 Denver Retirement Guide

 

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