The coronavirus pandemic has decimated many a retirement plan. But there are avenues for advisors to help get clients back on track.

Investors shouldn’t be tapping 401(k) retirement money and using it for riskier investments during this period. As part of the CARES Act, Congress has permitted people withdraw up to $100,000 from their 401(k) or IRA accounts this year without having to pay the typical 10% penalty for people under the age of 59½. The decision was instituted to assist people in managing the economic effects of the coronavirus pandemic.

While the pandemic has served as a chance for new people, notably millennials, to start investing in stocks, new retail investors should also be aware of the risks associated with equity markets.

Advisors need to pay particular attention to the needs of female clients in the current climate.

“While men typically have borne the brunt of job losses in past recessions, this one has hit women disproportionately hard as services-sector jobs where women are heavily represented faced some of the tightest pandemic restrictions,” reports Reshma Kapadia for Barron’s. “What’s more, child-care and elder-care duties have fallen more heavily on women as schools and services were disrupted; that has contributed to nearly two million women leaving the work force and not actively looking for a job and millions more reducing hours or taking a step back in their careers. And the recent recovery in jobs so far has been more pronounced for men.”

Going with Cash?

With the way the stock market has been fluctuating up and down as of late, investors who can’t stand the high level of volatility are probably parking their capital in the cash lot. With the Federal Reserve slashing interest rates to zero percent, cash might be king.

With yields on cash instruments at rock bottom levels, holding more cash may seem like a counterintuitive strategy, but it actually has some merit.

“While difficult to think about retirement when income has taken a hit, advisors recommend trying to continue saving, even if it’s taking some of the cash that would have gone toward commuting or child care and putting it into a spousal individual retirement account,” added Barron’s. “Though the limit is $6,000 compared with $19,500 in a 401(k), some money that can compound is better than a two-year gap in savings. Another option: Catch-up contributions for those that are 50 or older once income pressures subside.”

For more on income strategies, visit our Retirement Income Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.