The COVID-19 pandemic impacted Millennials and older Gen Zers in many ways, including their ability to save for retirement. Find out how to get back on track.

Retirement is decades away for most Millennials and Gen Zers, but the COVID-19 pandemic has handed out financial setbacks left and right.  

If you’re worried about the impact on your future retirement, find comfort in the fact that there is still time to rebound. Now is the time to discover actionable tips and regroup, that way you can put your focus back on retirement.

How the pandemic impacted Millennial finances and retirement

Millennials questioned their retirement plans

The COVID-19 pandemic rocked the world, with major lockdowns causing spikes in unemployment and a turbulent ride in the stock market. In the U.S., many Millennials have faced extreme financial hurdles as these events unfolded, causing 39% (according to Business Insider) of the generation to question whether or not they can save enough for retirement because of the pandemic. 

Plenty of Millennials started saving…but some also paused their retirement goals

For those able to actively invest through the highs and lows of the past year, there were certainly gains to be made. As of March 2021, stocks gained 79% of the historic losses experienced just one year earlier. But 40% of Millennials either lost work or someone in their household lost work due to the pandemic. So while 18% of Millennials started saving more for retirement since the beginning of the pandemic, 8% paused their savings entirely. 

Retirement accounts became a source of loans

Additionally, existing retirement savings have served as a lifeline for Millennials more than any other generation over the last year. 33% have already or plan to make a withdrawal or borrow from their retirement plan, compared to just 15% of Gen X and 10% of Baby Boomers who have done the same.

It’s easy to feel overwhelmed by these statistics. But luckily, Millennials still have decades to go before reaching retirement age. With that amount of time ahead of you, taking even just a few small steps in the years to come can help you rebound your retirement fund no matter what’s happened since the start of the pandemic.

1. Avoid volatile meme stocks

12 Ways To Get Your Retirement Savings Back On Track After The Pandemic - Avoid volatile meme stock

A lot of Millennials and Gen Zers jumped into hands-on investing as the stock market began to recover in the second half of 2020. Playing the market became as much of a money move as it was a statement against hedge funds, particularly with the rally around stocks like GameStop and AMC in early 2021.

Whether you gambled on these types of “meme” stocks or not, it’s best to think about the long-term rather than speculating over short-term gains.

Consider funneling any day trading money into your retirement plan, especially if you’re not able to constantly put in the time and effort involved with active investing. Plus, retirement plans like 401(k) and IRAs offer distinct tax advantages, unlike taxable brokerage accounts.

2. Utilize your 401(k) and employer match

If your employer provides a 401(k) and offers matching contributions, save enough in your plan to qualify for the full match. This is free money towards your retirement savings. So, maximize your own contributions in order to get the most from your employer!

For example, an average employer contribution in the U.S. is 4.3% of an individual’s salary. If you make $50,000 a year, that amounts to $2,150 a year (or about $180 a month). Getting the full employer match doubles that annual savings to $4,300 a year. That grows as you receive raises and promotions, so be sure to increase your 401(k) contributions every time your salary increases.

3. Stay at your job until your 401(k) is fully vested

As you make contributions and get an employer match, check for any vesting requirements from your company. Being vested means you own 100% of the funds in your retirement account. Some companies require you to work at the organization for a certain amount of time before becoming “fully vested” in the matched funds. Any contributions you make with your paycheck always belong to you, but you may only receive part of the matched funds if you leave before becoming fully invested.

Before you think about leaving your job, check to see how vested you are in the employer contribution portion of your portfolio. It may be worth staying at the company for a little longer in order to get all of the funds. The exception, of course, is if a new potential position pays better or offers better benefits. No matter what, vesting should definitely be a factor in any career move, especially if you’re working on catching up on retirement contributions. 

4. Make investing easy

12 Ways To Get Your Retirement Savings Back On Track After The Pandemic - Make investing easy

If you don’t have a 401(k), or already max out your contributions, make other retirement savings as simple as possible. Don’t overthink your choices, especially when you still have time to incorporate some risk in your portfolio. Consider a robo-advisor or index fund to help automate the decision-making process.

These platforms use artificial intelligence to analyze your financial situation and offer curated portfolios based on your financial situation and ideal retirement age. It simplifies the investing process and you can typically choose from a variety of tax-advantaged retirement accounts. You can even automate your contributions to help you stick to your savings goals, even if it’s just a few dollars each month.

5. Take advantage of free or low-fee brokerage platforms

Many robo-advisors and brokerage firms now offer trading platforms that not only make it easy to invest but inexpensive as well. Years ago, you would have needed a financial advisor who would charge a sizable percentage to manage your portfolio; not to mention a large minimum balance as well.

Today, all kinds of options are available, from free day-trading platforms to low-cost robo-advisors. Find investment platforms that provide the support you need without hefty fees eating away at your earnings. When you’re making up for lost time, you need to maximize every bit of momentum possible. 

6. Continue consistent payments on a 401(k) loan

A lot of people tapped into their existing 401(k)s during the pandemic, with Millennials leading all other generations. While 401(k) loans are typically capped at $50,000 (or half of your account balance), the federal government increased the limit to $100,000 (or 100% of your account) during the pandemic. If you did borrow from your retirement plan, stay on top of your monthly payments in order to avoid any penalties or fines. Typically, your payments will be taken directly from your paycheck and deposited into your 401(k), usually over a five-year term.

If you quit or lose your job, the repayment period is usually expedited. If you can’t repay the loan in the new timeframe, you’ll be charged a withdrawal penalty on the remaining balance. Depending on your other types of debt, you may want to prioritize paying off your 401(k) loan so you can get your savings back on track and avoid future penalty fees.

7. Consider putting deferred student loan payments towards retirement

The pandemic initiated a bit of short-term relief for individuals with federal student loans, primarily by offering interest-free deferred payments through at least September 30, 2021 (note: this only applies to federal student loans, not private student loans).

This pause has been automatic for all borrowers unless you have proactively decided to make payments during the deferment period. Deferment isn’t the same as forgiveness, so you still have to pay back the full amount of your student loan balance.

If you have a federal student loan and can afford your payments, you may still opt to pause them, especially if you haven’t been contributing to your retirement savings. Consider taking advantage of the deferment period and diverting the student loan payment amount to your retirement plan instead. The average monthly payment for a student loan is nearly $400, which could help make up for any lost contributions over the last year.

8. Open an IRA

12 Ways To Get Your Retirement Savings Back On Track After The Pandemic - Open an IRA

An individual retirement account (IRA) is a tax-advantaged account that can help you save even more. There are two kinds to consider. The first is a traditional IRA, which lets you deduct your contributions from your income tax each year. When you take withdrawals in retirement, you’ll pay taxes on that money.

If you’re not too worried about lowering your taxable income, a Roth IRA can help you even more during retirement. That’s because you’ll pay taxes now when you make a contribution, but you don’t pay any taxes when you retire and make withdrawals. Any portfolio growth you have made is completely tax-free. It’s a great way to maximize your retirement savings and still save the same amount.

In 2021, the maximum annual contribution limit for either type of IRA is $6,000. If you’re married and only one spouse is working, you can open a spousal IRA and have the working partner contribute to the other spouse’s account. 

9. Use a spare change investing app

A painless way to increase your retirement savings is to use a spare change investing app. This lets you connect your debit card to a retirement account. Every time you make a purchase with the card, the app rounds up to the next dollar and deposits the change into your retirement fund. So even if you don’t feel like you have enough to put away a huge amount each month, you can still put a few drops in the bucket each month and grow your savings over time.

Acorns is a great option to get started with and has additional features that you can utilize as you’re ready to put even more towards your retirement savings. You can set up recurring contributions in small amounts as you get more comfortable with your financial footing. Additionally, Acorns gives you the option to earn bonus investments when you shop online with participating retailers. It’s like a cash back app, except the money gets invested instead of going into your checking account. As with any investment app, be sure to check the fees and make sure they’re worth the gains. 

10. Save for future medical expenses with an HSA

Saving up for medical expenses today with a health savings account (HSA) can actually help you save for future healthcare needs as well. An HSA comes with triple tax advantages and it is generally available to use if you have a high deductible health plan (HDHP). To qualify, your deductible must be at least $1,400 for an individual or $2,800 for a family. You can then contribute up to either $3,600 a year to your HSA for yourself, or up to $7,200 for your family.

What does this have to do with your retirement? First, the funds in this account are yours — they never expire, as they would with a flexible spending account (FSA). Additionally, you get three separate tax benefits:

  • Contributions are tax-deductible when using your own funds.
  • Interest, dividends, and capital gains from your investments grow tax-free.
  • Withdrawals for qualified medical expenses are also tax-free.

Contributing to an HSA now saves you money at multiple stages of life, and prepares you for increased medical expenses once you reach retirement age.

11. Prioritize retirement savings over kids’ tuition savings

If you have young kids, you may be contributing to a college savings plan to cover their future tuition costs. But it’s generally considered unwise to do this until you’re totally on track for your own retirement. Otherwise, you’re more likely to need to rely on your kids when they’re grown to help you with your own finances in retirement.

Additionally, there are plenty of options for them to afford college, such as starting out at community college, working part-time in the summer, and taking out federal student loans. And with your own retirement on course, you’ll be better positioned to help them if a true financial emergency does occur. 

12. Catch up with future funds

12 Ways To Get Your Retirement Savings Back On Track After The Pandemic - Catch up with future funds

As you bounce back from the financial ramifications of the pandemic, make a long-term pledge to yourself to bolster those retirement funds. Anytime you get an extra lump sum of money, put at least half into your portfolio on top of your regular contributions. For instance, you could save half of all your future raises, which also helps you from accumulating higher living expenses on top of saving more. Also commit to saving a set percentage of future tax refunds or other one-time windfalls. These infrequent amounts can make a huge difference in your long-term retirement plan. 


The last year may feel like it’s dealt a lasting blow to your finances, but remember that retirement planning is a long-term game that will be affected by economic upswings just as much as the downswings. Stay consistent with your contributions and find places where you can challenge yourself to save just a little bit more. Pair that with maximizing your tax benefits and you can really get yourself back on track.

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About the author

Lauren Ward
Total Articles: 23
Lauren Ward is a personal finance writer covering credit, mortgages, small business, investing, and more. She lives in Virginia and previously worked at the Federal Reserve Bank of Richmond and in nonprofit fundraising. You can find her on LinkedIn or on Twitter.