The Financial Restart After COVID

Reevaluating Choices

Since COVID-19 became a household name, many of us have had to adapt to a new normal. Some changes might have to do with how you work. Others around how you spend.

While many of the lifestyle changes under COVID won’t last forever, it may have permanently shifted your ideas on how you want to spend your retirement. If that’s the case, you may need to tweak your finances to suit your new plan.

Reevaluate Your Budget

There used to be plenty of reasons to spend on food during the day when we went to offices. Before COVID, about half of out-of-home dining occurred during breakfast or lunch.1

For instance, you might have eaten lunch with coworkers or grabbed a quick coffee and bagel as you headed into the office. That may no longer be the case. About $52 billion has the potential to shift per year from out-of-home eating to at-home dining.1 The story is similar when explaining the drastic drop in spending on clothes and transportation.

But this doesn’t mean we have stopped spending. With so many working from home, spending on housing repairs, maintenance and utilities has increased. Workers could spend 32% more on annual maintenance and repair.1

If you have experienced shifts in spending, it’s a good time to adjust your budget. Determine where your money is going and where you may want it to go in the future. If you’re spending half of what you used to on food, for instance, would it make sense to put that money into your retirement account? Or do you want to put some of that money towards a dream vacation once travel becomes safer? 

Plan for Extra Savings

By storing additional money in a short-term, easily accessible account, you may have it for the moment when you are ready to spend it or put it in an account for your future.

Redetermine Where You Want to Live

Before the pandemic, less than 5% of workers worked from home three days a week or more—now upwards of 50% of workers do.2 This has changed how people view where they live. Pew Research found that about one in five people either moved or know someone who relocated because of the pandemic.3 As attitudes have changed about working from home, many companies are allowing employees to move away.

Considering a Move?

If you’re thinking about moving, first check with your employer. Sometimes an employer may allow you to move, but they also may adjust your pay to the location you want to live. For those living in high-cost cities, it may lead to a dramatic drop in salary. Weigh whether the reduced salary still makes sense.

Reenvision Your Retirement

What you hope to save for and do in retirement is a very personal choice. Some dream of flying all over the world during retirement. Others want to spend as much time as possible with grandkids. Still others want to retire to try another career. 

Whatever your goals, ask yourself if they have changed due to the pandemic. Now that you’ve hung around the house for months, does the idea of retirement fill you with trepidation? If you’ve been separated from your children or grandchildren, how do you feel about being away from them long term? 

It's fine to adjust your goals. Just make sure your savings plan fits your new needs. It’s perfectly understandable if you’re now trying to figure out your new normal. It’s important, though, to make sure you and your finances are in alignment on what that the new normal is.

Ready to Talk Finances?

To learn more about ways to adjust your investments as you change your new normal, we’re here to help.

1American Century Investments and the U.S. Bureau of Labor Statistics (BLS) Consumer Expenditure Surveys as of 12/31/2018, the latest data available. Using annual expenditures from the BLS surveys, we calculated the difference in spending between wage earners (workers) and retirees who stay at home. We then determined the potential increase or decrease in annual spending if more workers were to follow similar spending patterns as retirees.

2The Economic Impact of Working From Home More Often, American Century Investments citing data from the U.S. Bureau of Labor Statistics, Job Flexibilities and Work Schedules (averages for the period 2017-2018) and the Stanford Institute for Economic Policy Research, data from a survey of 2,500 U.S. residents carried out between May 21-29, 2020.

3About a fifth of U.S. adults moved due to COVID-19 or know someone who did, Pew Research, July 6, 2020.   

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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