Lessons from Coronavirus: Protecting Your Retirement Funds During Stock Market Crash

By Kathy Pierce, Expert Contributor  The haunting news of the novel coronavirus, which causes COVID-19, unleashed its fury on the stock market in February. Fears escalated, sending stocks off a cliff. No sector was safe as panicked sellers aggressively began to unload. The speed at which the Dow tumbled into correction territory was stomach-churning. The last time the stocks slid into such a deep ravine was during the Great Recession of 2008. S&P Dow Jones Indices senior analyst Howard Silverblatt told Markets Insider that the recent carnage on Wall Street wiped away $6 trillion in market value in less than one week. Shockwaves and a few tremors continued to rumble from Wall Street in the first week of March. Most investors dreaded seeing how much damage had been inflicted on their retirement accounts. Many people in or near retirement had their nest eggs or 401(k)s torched. As the coronavirus continues to drive stocks down, it’s important to know there are options to growing and preserving wealth: annuities. An annuity is an insurance product that provides guaranteed income in retirement. There is no risk of a global virus or an economic downturn diminishing its value. The millions of Americans who have opted for annuities have peace of mind knowing their money is safe. Few Americans can devote hours each day to watching a stock chart. With annuities, there’s no need to monitor the market.

Fixed Annuities: A Safe Choice to Secure Your Financial Future

Since their inception, annuities have evolved; they can be customized to fit an individual’s needs. A fixed annuity is considered the most straightforward type of annuity. With fixed annuities, the insurance company takes on the investment risk and guarantees the premium and a minimum interest rate. Fixed annuities are predictable, designed for safety and are a low-risk CD alternative. Another type of annuity, called a fixed-indexed annuity, offers the growth potential of indexed-linked interest while providing protection from a volatile market. A major reason people buy annuities is because you will always walk away with the money you started with. Equally appealing are the tax benefits.

Stability with Tax Benefits

These financial products can not only provide guaranteed income for life, but also they can help people save and grow their money on a tax-deferred basis, allowing for more efficient growth and greater control over their tax situation. Unlike other tax-deferred options, annuities have no annual contribution limit. Thus, taxpayers can stow away more cash for their retirement years. And the interest in the accounts is compounded annually, which is another huge benefit. Upon retirement, individuals may select a lump-sum payment, but other payout options are available. These are reliable ways to complement Social Security and pensions.

Taking the Offensive Position to Protect Your Retirement

It’s been barely a decade since investors experienced this level of Wall Street whiplash. Most of us get complacent when the investing road is smooth. This recent market annihilation is a reminder to take a better look at your retirement and take preemptive steps to guard against the risks, which will inevitably occur. Planning for retirement can be intimidating for most Americans, as they tend to take the “I’ll do it later” stance. However, taking the time to plan doesn’t need to be burdensome. Instead, it can be viewed through a more positive lens, as a decisive way to replace one income stream with another. It is never too late to take control of your financial future. About the Author Kathy Pierce is a business writer and an options day trader. She previously worked for 28 years with Deloitte. Her writing has appeared in Woman’s Day, Forbes, Huffington Post and Yahoo Finance. She’s also created content for the University of Notre Dame and Stanford University. She holds a Bachelor of Arts in communications and a minor in economics.