6 Important Questions to Ask About Your Financial Plan During the COVID-19 Crisis

There’s no getting around it: the coronavirus has disrupted the financial world as we previously knew it. With many businesses experiencing shutdowns or slowdowns and a record number of Americans filing for unemployment, the economy has come grinding to a halt.

The market of early 2020 and the market of today look very different. As a result of COVID-19’s impact, the S&P 500 declined 20% in the first quarter of the year—its biggest loss since the Great Recession (2008). Meanwhile, the Dow Jones Industrial Average dropped 23% in that same period—its largest slide since Black Monday (1987).

Seeing this volatility makes many investors feel the need to take action. While the best plan is to follow the financial plan you already have in place (which should have been created with a downturn like this in mind), there are some thoughtful questions you can ask to help strengthen your finances during this trying time:

1. Do you need to adjust your goals or timelines?

The recent reduction in asset values provides an ideal time to re-“stress-test” your current financial plan—particularly if you are approaching key financial transition points like retirement or sending a child to college. Consider options for how you might need to modify your plan in order to accomplish your most important goals in light of recent events.

How the recent market changes affect your financial plan depend greatly on where you are at within the timeline of your plan. The best way to find out where you stand and if you need to adjust your goals or timelines is to talk with your advisor.

2. Can you better prepare for the recession ahead?

We don’t know how long the current recession is going to last. Review your overall asset allocation and make sure you have enough cash and other stable investments—like high-quality bonds—to weather a reduction or loss of income in the short term. You should also identify and re-evaluate your positions that have been most negatively impacted in the short term to ensure they are positioned to recover value over the intermediate and long term when the market inevitably recovers.

In addition to establishing a 3-6 month emergency fund of cash and other stable investments, identify the “next source of liquidity” you might need once that is exhausted. This could be a home equity line of credit, a 401(k) loan, bonds and other more stable investments, or more defensive stocks that haven’t been as hard hit by the recent downturn.

3. Are there any potential leverage points in your portfolio?

The reduction in equity prices may offer opportunities to make tax-advantaged adjustments to your portfolio. These might include reducing a concentrated equity position in a taxable account when realized long-term gains might be lower, and converting depressed IRA dollars to Roths to lower taxes and increase the proportion of your savings that can be withdrawn tax-free when the market recovers.

Repositioning where you choose to locate various asset classes like bonds, aggressive growth stocks, and/or core stocks among the various tax registrations in your portfolio may make them more optimally positioned for the recovery ahead.

4. How can the new economic stimulus package help you?

Understand what is available to you under the government stimulus packages. Direct payments have gotten a lot of headlines—but make sure you understand the recent enhancements to unemployment claims, including making benefits available to self-employed workers and employees whose hours have been reduced.

Be aware of other changes included in these packages that can benefit you financially, such as: federal loan deferments, tax deadline extensions, penalty-free IRA withdrawals, suspension of required IRA distributions, and SBA loans and tax credits available to business owners looking to retain and continue supporting their workers.

5. Do you need to update your estate plan?

Revisit your estate plan, particularly your medical directive and health care proxy to ensure that you’ve selected to receive ventilator assistance if you need it for COVID-19. Also check that your health care proxy is in close enough proximity to you to manage your care if need be in light of current travel restrictions.

6. Can you use this event to reduce your spending?

Avoid large-scale temporary adjustments to your budget. Instead take advantage of the temporary, unplanned “lifestyle changes” brought upon us by shelter-in-place orders to make smaller but more permanent changes to your spending that you can continue even after things go back to normal. A few examples include making your coffee at home several mornings a week, staying in for a barbeque one night each weekend rather than going out both days, or vacationing closer to home one time each year.

Spending adjustments of 2-4% over longer periods are not only more sustainable than larger reductions of 20%+, they are also more impactful in reaching longer-term goals like saving for retirement.

Stick to your plan, prepare for what you can, and remember ”this too shall pass”

Asking and answering the questions above can help ensure you are prepared for the uncertain months ahead. As time passes, the coronavirus outbreak and market downturn we’re experiencing in this moment will likely become distant memories. Until that time, put yourself and your family in the best position—both physically and financially—to weather the storm and emerge stronger on the other side.

Stay safe!

If you have any questions or concerns about how COVID-19 will impact your financial plan, please don’t hesitate to reach out to the team at Wealth Impact Partners. We’ll be happy to set up a phone call or video chat to discuss!

The information provided does not constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Consult your financial professional before making any investment decision.


The opinions expressed in the article are those of the author and should not be construed as specific investment advice. All information is believed to be from reliable sources, however, no representation is made to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. Indices are unmanaged and do not incur fees. One cannot directly invest in an index.

Neither Wealth Impact Partners, Valmark Securities nor its affiliates and/or its employees/agents/registered representatives offer legal or tax advice. Please seek independent advice, specific to your situation, from a qualified legal/tax professional.

Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment advisory services offered through Valmark Advisers, Inc. a SEC registered investment advisor, 130 Springside Dr., Suite 300, Akron, OH 44333-2431, 800-765-5201. Wealth Impact Partners is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.

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