July 13, 2020
Retirement, Finances, & Covid-19
Watching the stock market for the past few months has helped strengthen my self-control. As I get the urge to call my financial advisor, I stop and remind myself whatever action I think I want to take, I will regret tomorrow. So, I put the phone back down and do nothing. The feeling passes.
Straight ahead will be a tremendous number of evictions because of missed rent payments. Small and medium businesses are struggling to hold on while others have likely closed for good. Travel remains risky or even impossible due to always-shifting restrictions from various states or cities. Who wants to fly somewhere only to be told you must spend 14 days in self-quarantine? Doesn't sitting next to anyone on a plane seem like a roll of the dice? Cruise ships...are you kidding?
While the economy remains royalty messed up, unemployment at recession-like levels, and coronavirus continuing to upend lives and the future, the investment numbers have rebounded from a disastrous drop in March to back within reach of the start of the year's mark. For a non-financial person like myself, this behavior seems counterintuitive; I would have expected the markets to tank right along with the overall mood in the country. But, apparently, the world, as seen through the eyes of Wall Street, is not all that bad.
I know enough to grasp that financial markets often operate on emotion, anxiety, and what I will call future-sight. A day's bad news can hit them like a brick to the forehead....or be a financial non-event. I have been at this long enough to understand there is rarely a straight line between logic and the S&P 500.
So, that raises today's questions: how do we retired folks make financial plans for a future that is even more unpredictable and unknown than average? How bad do things have to get for us to make some serious moves of readjustment? Since interest rates barely break the surface anymore, how do we stay ahead of inflation? With governments using deficit spending as an everyday planning tool, how safe is anything? When the bill comes due, then what?
Do we make a connection between the inefficiency of the government to admit the seriousness of the situation and our financial stability? At what point does the overall market react to the short and long-term future in a way that harms our investments?
And, if it does, then what? Personally, I don't have another 10 or 20 years to rebuild my financial foundation as it washes away. Natural up and downswings I handle; a Great Depression style scenario, not so much.
I am not looking for a hot tip, an easy answer, the throwing of a simple switch that calms the turbulent seas. I imagine I am asking questions that are more universal at the moment: what are we doing under the dual assault of Covid and an economy struggling to stay afloat?
How have the events of the last five months affected your investments, your planning, your outlook? Have you started to think of cash stuffed in the mattress? Is a backyard about to become a large vegetable garden, with a few chickens thrown in to produce eggs and dinners?
Of, are you zen-like calm: "Been here before. It will sort itself out. Stay the course."
I am genuinely interested in whether the unique combination of events we find ourselves is affecting how you plan for your future. As the disease seems to be getting worse, we all could use a dose of neighborly help, sharing, and support right about now.