The novel coronavirus pandemic has had an economic toll that has affected tens of millions of people. Everyone has felt the impact in some form or fashion.

Many people have lost their jobs. Millions of others have been furloughed. Those saving for retirement and those already retired have also had some surprises.

Equity market indexes saw record-breaking swings. Beforehand, those 1,000-point-or-more swings had taken months or even years to occur.

In the first quarter of 2020, some happened as quickly as in 24 hours. Given all this, it's natural for us to think about how much of a toll that the early days of the pandemic had on everyone's retirement security.

In an article by the Urban Institute, Richard W. Johnson talks about seven ways that the Covid-19 pandemic could undermine the retirement plans of many.

The Most Important Takeaway

Johnson's insights highlight the importance of having a financial plan. They also show how a well-thought-out plan could help you navigate uncertainty and be a psychological safety net in times like now.

One effect of the pandemic was the massive toll on total retirement savings held by retirees and workers in America. The good news is that many have had their money recover (but what also lies ahead is uncertain).

What Happened Last Time (And Why It Matters)

In 2008, the Great Recession and financial crisis led to a huge drop in the Russell 3000, a U.S. market index. Then, the Russell index, which Johnson says is designed to reflect the performance of the U.S. stock market, fell 39%.

During that time, Americans saw a 24% decline in their retirement accounts, from 401(k) plans and other employer plans to IRA accounts.

In total, Americans lost $2 trillion in total retirement savings in 2008, according to Johnson. What about the market impact in 2020?

In the first quarter of 2020, from January 1 to March 31st, the losses were (perhaps surprisingly) even steeper. The Russell 3000 index fell 25% through April 3, wiping out an estimated $3.8 trillion in total retirement savings for Americans.