Planning for the future during a pandemic

For several months, lockdowns have interrupted our ability to make plans. It's not clear yet when we'll return to alert level one, or when life will go back to 'normal'. This uncertainty has made it difficult to stick to the retirement savings and insurance plans we had prior to the pandemic. What can we do right now to make sure we're financially prepare for the future? – Prepared planner, North Island. 

For many of us, the global pandemic and varying alert levels across the country have raised a lot of uncertainty around the immediate future. In a time of crisis, it's understandable that your priorities may change as your circumstances shift. However it's clear that the virus will be with us for some time to come, so as we adapt to these new circumstances, our financial plans need to adapt as well. 

When alert levels change it can be challenging, but it's important not to lose sight of your long-term financial goals. In a 2020 study from North Carolina State University of 223 study participants, proactive planning, when people engage in planning for the future, was proven to reduce signs of stress by not only giving you something to work towards in the present, but something your future self will thank you for, too. 

1. Set goals and make a plan

When it comes to preparing yourself financially for the future, setting goals and creating a plan will help to keep you on track towards what you want to achieve. Your goals will depend on what stage of life you're at – maybe you want to get married, buy a house, or retire in the next five to ten years. Meanwhile, your plan to achieve those goals is something you should regularly review as your circumstances change.

It's possible that your short-term plans and finances have changed due to the pandemic. If that's the case, it's a good time to revisit your long-term goals, to make sure that you're staying on track to achieve them. 

2. Speak with a financial adviser

If you're unsure about where to start, speaking with a financial adviser is a great way to receive advice specific to your situation. A financial adviser will review your personal circumstances and objectives with you, and use the information you provide to offer advice. Their services can usually be accessed over the phone, so you can receive advice from the comfort of your home. 

When choosing a financial advice provider, it's helpful to know what you want to achieve from the advice you receive, and then make sure you pick a provider that meets those needs. Financial advisers are only licensed to offer advice on areas they are competent in, and some will specialise in certain areas. You also have the right to ask your adviser how they are being paid, and whether this is from fees you pay, or from commissions paid by companies whose products are being recommended to you.

Be prepared to meet with a few different advisers before deciding who will best meet your needs. 

3. Review your investments

If you have an investment like KiwiSaver that you plan to use for your first home or retirement, your goal and time-frame will help to determine how much you should be contributing, and which fund is right for you. Events like the pandemic can affect markets, particularly in the short term, so it's important to consider how much risk is appropriate for you as you select your fund. 

Websites like Sorted have a range of information and guides to help you get started. You may decide to stay with the fund you're already in, but it's helpful to know what your options are, and know that it's simple to switch if you find something that suits you better.

4. Review your insurance

It's a good idea to review your insurance at the same time, to make sure that you have the right protection in place to ensure your financial plan can stay on track even in the face of the unexpected. If something were to happen that impacted your ability to keep working, would you be able to keep up your current lifestyle and reach your goals despite the loss of income? And if you have a family that depends on your income to afford mortgage repayments, children's schooling, or other necessities, would they be able to achieve financial freedom without your contribution?

If you're unsure about the answer to those questions, we recommend seeking advice to determine whether life and income insurance might be right for you. Planning for the worst can be a difficult conversation, but by making insurance a part of your financial plan, you can remove worry about you and your family's financial future if something unexpected were to happen to you.