For millions of retirement savers, the pandemic was a gut punch. There was the jarring stock market drop in March 2020, then millions lost their jobs, health insurance and ability to fund their savings. It was a financial catastrophe for many Americans — and they may not recover for years.

Joni Ratts, a retired San Francisco Bay Area business owner, experienced a version of this 12 years ago, having a “major disaster,” as she called it, with her finances during a difficult divorce. Although she has weathered the pandemic reasonably well, her earlier economic upheaval left her with debt and limited credit, she said. She needed help.

Ratts, who co-owned a design-build firm with her husband, connected with Clari Nolet, a certified financial planner and certified divorce financial analyst. “Clari evaluated my financial needs and expenses to project how much money I needed to maintain a stable and healthy lifestyle,” said Ratts, 78. “All of this was new territory for me.”

“Take care of yourself, and if you don’t already have a good support system, develop one,” says Joni Ratts. (Jenna Schoenefeld / The New York Times)
“Take care of yourself, and if you don’t already have a good support system, develop one,” says Joni Ratts. (Jenna Schoenefeld / The New York Times)

Now, in the pandemic, people who could otherwise be saving for retirement face similar challenges. Although contributions to retirement savings are often difficult to track, 27% of Americans surveyed by the personal finance site FinanceBuzz last year said they had reduced or stopped theirs because of COVID-19.

The pandemic also stymied the 21% of adults who hadn’t started saving for retirement, the survey noted, including 45% of Generation Z and 20% of millennials. In addition, 10% of workers reported taking withdrawals from their 401(k)s last year, a jump from 6% in 2019, according to a survey by Alight Solutions.

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Some companies that suffered the most in the pandemic cut their 401(k) matching contributions. More than 80 with 100 or more employees suspended their matches, according to the Center for Retirement Research at Boston College. Only 26 of them had restored the contributions by April.

Yet the pandemic setback picture is a fuzzy one. Most white-collar and professional employees appear to have felt little impact on the retirement front, according to the center. Those who spent less on work-related costs, like meals and commuting, were often able to save more. And Social Security recipients continued receiving their checks.

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While the economy may rebound robustly for most workers, it will still leave millions behind. Nearly half of all workers didn’t have a workplace retirement plan even before the pandemic, said Anqi Chen, assistant director of savings research at the center.

The unequal impact of the pandemic amplifies the gaps in the U.S. retirement system, Chen said. Although “401(k) contributions and balances seem relatively unaffected and unemployment has not disproportionately hurt older workers, the pre-COVID weaknesses remain: Social Security has a long-term deficit, 401(k) balances are inadequate, and older workers have trouble finding new jobs.”

Despite the hurdles to saving, there’s much you can do to triage your financial future.

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First, track your total spending. Even if you’re not in a painful financial transition, the principles for recovery and planning are universal, noted Nolet, the certified financial planner. One of the first questions she asks clients is “How much do you spend annually?” Until clients invest the time in documenting their expenses, she said, they don’t really know the number: “They are like deer in the headlights when they realize they are spending way more than they thought.”

Spending has the biggest impact and is the input you have the most control over, added Nolet, who suggests — not surprisingly — creating a budget and sticking to it. “Once you know where you spend money, you can choose where to cut back,” she said. “Psychologically you have to work through wants versus needs.”

Other key spending questions she poses are: Can you afford your home? What kind of interest on you paying on loans and credit cards?

If you have credit card debts with double-digit interest, pay them off first, advises Lori Price, a certified financial planner in Florida and Connecticut.

Focus on health insurance. When many people lose their jobs, they lose health insurance coverage for themselves and family. Those laid off can often continue their insurance under a COBRA plan, Price said — but it can be onerously expensive.

“One client, a good friend who will turn 60 in a few months, was laid off facing a $1,700-a-month health insurance bill,” she said. “I told her to go through every discretionary expense. What expenses could she defer until reaching 65, when Medicare will kick in and reduce, but not eliminate, the high premiums? For those without a lot of savings, this is the first step.”

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Another option is applying for coverage through the Affordable Care Act, which offers a range of plans, including for those still unemployed.

Make catch-up contributions. If you’re 50 or older, the IRS gives you a little savings plum: You can save as much as an extra $6,500 annually in your defined contribution plans (which include 401(k)s, 403(b)s and 457s). If you have a SIMPLE (Savings Incentive Match Plan for Employees) individual retirement account or SIMPLE 401(k), the catch-up contribution is $3,000 annually; it’s $1,000 for a Roth IRA.

Automate your savings. If you’re working and offered a 401(k) with automatic payroll withdrawals, you can simply increase your contribution. Want to save even more? Many plans allow you to boost your 401(k) savings when you get a raise. Let’s say you’re 50 or older and save the maximum annual amount — $26,000. That’s $19,500 plus a $6,500 catch-up contribution. Also take your employer’s matching contribution, if it’s offered. This is the low-hanging fruit of retirement savings that most financial planners recommend — again, if you have access to it.

Adjust your portfolio. Just socking more money into a bank money market account won’t help you catch up much at all. After all, the S&P 500 index is up a stunning amount: more than 40% this year. Yields on money markets are awful — the top rate nationally was 0.60%, according to Bankrate.com. The best way to achieve your goals is to invest in no-load mutual or exchange-traded funds, preferably with an annual expense ratio below 0.30%.

Most mutual fund companies offer dividend growth and income mutual and exchange-traded funds. Also avoid the trap in thinking that money in the bank is safe money. If it’s not beating inflation, which is currently running at an annual rate of just under 3%, you’re losing purchasing power. “Don’t keep too much money in a bank account,” Price warned. “You’re getting paid very little to keep it there.”

Retire later. If you’re able, one simple strategy is to retire after the “normal” age for Social Security benefits, which is 66 for most Americans. That will give you more time to save. Social Security will even pay you more each month if you wait until 70 to collect benefits. A “delayed retirement credit” will raise your retirement payments 8% annually every year you wait from age 66 until taking benefits at age 70 for those born in 1943 and later.

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Set up your own plan. Small-business owners or those who are self-employed can set up their own plans, from Simplified Employee Pension IRAs to 401(k)s. Price suggests those over 50 consider a Roth 401(k), if your employer offers it. While contributions are taxed, withdrawals are not. “You’re taxed on money going in, not on gains,” she said. “If you can’t afford to pay taxes on withdrawals later, this is a good idea.”

Whether you are still recovering from the pandemic or weren’t severely affected, these financial planning principles should still be your bedrock. That way, you not only can be prepared for the next financial crisis, but can build a solid retirement foundation that’s durable during most normal years.

Ratts said she was glad she had enlisted the help of an adviser. But not everyone can. Her advice to anyone, no matter the situation: “Take care of yourself, and if you don’t already have a good support system, develop one.”