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June 30, 2020, 9:28 a.m. EDT

Will you have to tap into your savings this year to cover your bills? Almost half of workers say yes

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Nearly half of workers — 43% — say they’re going to have to withdraw from their savings because of the impact of COVID-19 on their financial situations, according to Principal Financial Group. 

The Des Moines, Iowa-based investment company found 15% of people will need to tap into their emergency savings, 13% into their employer-based retirement plans, 4% from their Individual Retirement Accounts and 4% from a Health Savings Account. The rest said they’d use stocks or other investments. Another 30% said it was still too soon to tell how their finances would be affected by the coronavirus crisis, the survey found

The government anticipated some hardships, which is why as part of the coronavirus stimulus package passed in March, known as the CARES Act, the amount an individual could withdraw or borrow from a retirement account was increased and penalties were waived. The CARES Act was created to ease financial burdens on people impacted by shuttered businesses and unemployment while states across the country locked down. 

Under the CARES Act, individuals can withdraw up to $100,000 in retirement assets, including from 401(k) and IRA plans, if they’re eligible, such as if they were laid off because of COVID-19 or they or a loved one became sick. People can also borrow $100,000 as a loan from a 401(k). These rules are for special circumstances related to the coronavirus, and available until Sept. 23. Repayments are also allowed in both instances. 

See: Should you use the CARES Act to access your retirement funds?  

Tapping into savings is a part of life — that’s what they’re there for — but financial advisers have suggestions for how to go about it if Americans intend to use some of the retirement provisions under the CARES Act. If available, borrowing from a 401(k) plan is usually better than distributing assets from the account directly. There are still downsides with borrowing, such as having to pay off the loan completely before separating from the job, but unlike distributions, the loans are not taxed and interest is paid to individuals themselves. In either scenario, advisers suggest these as a last resort whenever possible because account balances drop when a distribution or loan is made, and that lowers potential future returns and interest for the portfolio. 

Here’s an example Principal provided: A 35-year-old with a $16,000 balance in a retirement account could have $628,000 by 65 if she continues her path to retirement and takes no loan. With a $10,000 loan and reduced contributions, she’d have $601,000 by 65. With a $10,000 coronavirus-related distribution and reduced contributions, she’d have $543,000 in 30 years.

The situation becomes more dire for someone closer to retirement, Principal showed. A 50-year-old worker with $34,000 could have $255,000 by 65 years old if no loan is taken. If he takes a $15,000 loan and reduces contributions, he may have $240,000 at 65. If he takes a $15,000 distribution instead and reduces his deferrals, he’d have $204,000. Both examples use a 6% contribution rate and an employer match of 50% up to 6%, the firm said. The estimated rate of return was 12% for the first three years following the recession, then 6% every year until retirement.

Also see: This is how the $2 trillion coronavirus stimulus affects retirees — and those who one day hope to retire

COVID-19 had, and in some cases may still have, the potential to upend a person’s lifestyle. Cities across the U.S. are still working on reopening, such as New York City, which just started its first phase of re-opening on Monday. Small businesses were hit especially hard by the coronavirus crisis , and many Americans were left to wonder how they’d pay their rent or mortgages .

All types of earners will see the effects of COVID-19 on their retirement plans , according to research from the New School’s Schwartz Center for Economic Policy Analysis. Low-earners will suffer from unemployment, high-earners will see the impact on their investments and middle-income workers will feel the brunt of both sides.

The good news: the economy has already started to recover . The bad news: It’s going to take a while before it is fully healed. Economists expect the process may take a few years, though it depends on many factors, including how quickly Americans are able to return to society as normal and how long until there is a vaccine or treatment for COVID-19.

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