Advice on managing savings plans during COVID-19

RAPID CITY, S.D. – Just in this week, over 22-million people are unemployed in the United States, mainly as a result of coronavirus.

The market is on its way down causing some concerns about savings plans. Many people with 401Ks and IRAs are temporarily changing plans due to increased financial need and unemployment.

I spoke with a financial advisor to get some advice.

“It may be one of those times in life where you say, you know what I’ve got to turn off my 401K because I need that money to live on,” says financial advisor, Hugh Boyle with BMS Financial Advisors.

While Boyle doesn’t necessarily recommend dipping into what you currently have saved, he doesn’t think it’s a bad idea to halt paying into your 401K or other retirement plans.

“I think it’s okay to go into the 401K and adjust it so it’s more in tune, those investments are more in tune with when you’re going to spend the money,” say Boyle.

In fact, he is seeing a lot of clients adjusting their IRAs as a result of the current state of our economy.

If you’re considering tapping into your savings or changing the amount you save, he recommends that you first look into your options.

“Maybe it’s less expensive to get a short-term loan on just the equity within your home and not dip into your 401K,” says Boyle.

It can be dangerous to take from your 401K because depending on how much you take, it can move you into a higher tax bracket. So when tax season comes around, you may owe more in taxes and you may not have the means to pay those taxes back.

He does want to remind people that eventually, the market will go up again, and when that happens it’s wise to go back to contributing to savings plans.

For now, do what you can and seek financial guidance from an advisor if needed.

Boyle says, “panic is not a plan, so just take a deep breath and say, where am I financially. What can I do to help myself get through this.”

Categories: Coronavirus, Local News, South Dakota News