Retirement savings are facing a perilous triple threat due to the COVID-19 crisis. Market volatility, depletion of savings, and unprecedented job losses have the potential to wreak havoc on even the best laid retirement plans. However, with a few prudent steps pre-retirees can balance their current financial needs with their long-term retirement financial security and peace of mind.

The first COVID-19 retirement threat is the recent massive volatility in the capital markets, which has taken a significant toll on the value of retirement portfolios. The average 401(k) balance fell 19% in the first quarter of the year and the average IRA balance fell 14% (1). How much and how fast the markets may recover is difficult to predict. But, especially for those who are nearing their planned retirement date, these losses can derail years of planning and preparation. Many will need new strategies to course-correct their retirement preparation.

Second, the current crisis is prompting many to drain retirement savings. Over a quarter (27%) of Americans either plan to withdraw money from their retirement savings accounts or already have in order to help weather the COVID-19 crisis.(2) New government rules make early withdrawal easier and less costly. Under the CARES Act, many Americans can now take a withdrawal of up to $100,000 from their retirement savings without the typical 10% penalty.

Accessing retirement savings may help address short-term financial needs, but can also have dangerous longer term impact. Even before the pandemic hit, the average retirement savings were likely to fall short of what is needed for a financially secure retirement. The median retirement savings of working-age families hovers around just $5,000, and half of all families report having no retirement account savings at all.(3) Depleting already insufficient funds will exacerbate their retirement financial shortfall.  As conditions normalize, many pre-retirees will need to look for ways not only to “pay back” their retirement savings, but also to build more savings to achieve the retirement they aspire to.

Third, unemployment has soared during the pandemic and resulting economic shutdown. Some will be able to resume work after only a short period, but others may find their career path disrupted for the long-term. Many who are suffering long-term job loss will be forced to spend down savings and may have substantially reduced retirement funds and benefits. Research shows that a job loss can reduce retirement savings by up to $6,218, on average, but this amount can be substantially more for higher earners and those who are unemployed for a longer duration.(4)

Without question, many Americans are in a difficult financial situation during the current crisis. But that doesn’t mean future retirement security needs to be irreparably damaged. To help keep your retirement on track, here are a few steps to consider now:

• Instead of depleting retirement savings,  tap into alternate funding or consider refinancing debt. For some, home equity loans may be an attractive option. For others, a regular 401(k) loan may be a better option than a withdrawal. You may also be able to seek forbearance on payments from your credit card company, mortgage lender or other creditors. Under the CARES act, those with student loans can also seek substantial relief.

• If you are tapping into retirement savings, use the money wisely, such as paying daily expenses or paying down debt. In fact, surveys show that most people withdrawing from their retirement savings during the pandemic are doing so for smart reasons. 60% have used these savings to pay for groceries, 42% spent it on household bills, 31% used it for rent or mortgage payments, and 27% used it for debt payments. Another 20% haven't spent the funds yet.(5) Avoiding expensive and unnecessary purchases when tapping retirement savings can help speed your financial recovery.

• Delay retirement or work longer. Pushing back your retirement date, or continuing to work, perhaps part-time, in retirement can give you the cushion you need to comfortably recover from the current crisis. In fact, amid the current economic climate, 54% of adults say they’d like to continue working in retirement.(6)

• Reassess your financial strategy. The widespread impact of the current crisis means many will need to reassess their investment strategy, retirement preparation, and financial planning needs. Re-thinking your financial strategy sooner rather than later will get you back to where you want to be financially faster and with greater confidence.