Since Covid-19 has made landfall in America at the start of 2020, it has wreaked havoc on the U.S. economy and stock market. As a leader in the financial industry, Barr Rosenberg understands the devastation this pandemic has brought upon investors. Savings have plummeted across the board, but it appears that one age group has been hit by Covid-19 worse than any other.
Barr Rosenberg explains that estimates show that on average investors under the age of 60 have experienced their retirement account balance drop by at least ten percent. There is a natural inclination to want to pull the money out of a retirement fund before these funds dwindle even more. However, Barr Rosenberg explains that history has shown that these things have a way of bouncing back. Those who have the luxury of time should remain patient and look to come out on the other side of this pandemic storm. This is important to note because the people who have been hit the hardest financially are those in their 30s. To provide some perspective, investors in their 80’s saw on average a drop of less than 6 percent in their overall retirement funds. Those in their 30’s saw just about a 14 percent drop.
Barr Rosenberg says understanding why younger people are seeing the steepest drops is actually rather simple. When financial experts provide investment advice to the younger generation, they usually suggest taking more risks. The idea being that short-term losses are worth the risk for larger long-term gains. Most younger people approve this approach because retirement feels so far off. Those who are older will start to look to invest more conservatively to ensure they have a nest egg available when the time comes to retire. Younger people are more reliant on stocks, while older investors will look to the security of bonds. Volatility is part of the natural course of things and a resurgence in the economy will one day come.
Barr Rosenberg understands it is not always easy to hear but staying the course may be the best course of action for those who have seen their retirement account balance fall off a cliff. Playing it safe can actually hurt the projections of long-term savings. Those who are older, however, should look to reallocate their assets. This means looking towards bonds and talking to a financial investor about some other safe methods of investments.