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Coronavirus hits retirement accounts hard but economists expect rebound

Posted at 8:06 AM, Mar 25, 2020

Since the outbreak of the coronavirus, many people across the Central Coast and nationwide have lost and continue to lose thousands of dollars from their retirement accounts.

But many financial analysts says it's not time to panic.

"If you're younger and you've got yourself in some retirement program and you've watched the overall value of that slump over the last few days or weeks, you can sit tight and know that most likely, it will come back," J.P. Maroney, the founder and CEO of Harbor City Capitol, said. "There's always a chance that certain businesses, individual stocks, could go bankrupt. The company could lose all its value and never come back. But the market in general cycles and comes back."

With each opening bell of the stock market comes an alarming fluctuation in retirement accounts.

Gains from the past three years have been wiped out in just a matter of days as the coronavirus prompts closures of companies nationwide.

Many savings plans are tied to stocks, meaning retirement funds are in for a bumpy ride.

But Maroney said the value is just a number on the screen and advises people to buckle up instead of bailing out

In the coronavirus relief bill set to be voted on Wednesday by the U.S. Senate is a measure permitting those impacted by losses to take a hardship withdrawal up to $100,000 from their 401-k plan.

Under that provision, you could make the withdrawal without the 10 percent penalty that typically applies to people under age 59 and a half.

Income taxes would still apply, but the Senate could vote to give people three years to pay those taxes and replace the funds withdrawn.

The consensus from many economists is to focus more on your current spending than the ups and downs of the stock market.

You may be able to cut costs and ride this out without any early withdraws.