By Elizabeth Harris
Aug. 8, 2022
We measure the health of the economy as a whole by a few big numbers — interest rates, which the Federal Reserve raised by three-quarters of a point Wednesday; gross domestic product, which we learned Thursday had dropped for a second consecutive quarter; and the stock market, which has been bouncing around for months. But for people working toward retirement, or dreaming of it, the one number that matters most is closer to home: their own retirement savings. And the volatility in the big-picture numbers is connected, of course, to individual plans.
The New York Times wanted to know how this uncertain moment is affecting you and how you were managing your retirement savings and investments.
Hundreds of you around the world responded to our queries. Some readers had specific questions, such as when to take Social Security. But others offered a wider view into their personal circumstances and how they were attempting to find equanimity.
At a moment when many feel a disconnect between the macro and the personal — recent polling showed a general malaise among voters about the economy even as some see stability in their own lives — these readers’ experiences show there are a variety of ways to cope.
‘I view this as an opportunity to buy cheaper’
It’s only now that Michael Lewis can recognize the value of having John C. Bogle, the founder of Vanguard, as his high school commencement speaker. At the time, Bogle’s influential investing advice for everyday Americans didn’t mean much to the teenage Lewis, who works as a director of marketing research at a technology company. But today, following the example of his grandfather and mother, he is an avid Vanguard investor.
“I didn’t appreciate it until way after the fact,” said Lewis, 41, of Berkeley, California. “It didn’t really even sink in until I was out of college and started to invest with them.”
The recent market uncertainty has not rattled him the way the 2008 crisis did. He remembers the mistakes he made the last time around, selling mutual funds at a loss.
“Basically, what it told me was, ‘Just don’t do anything,’” he said. “And actually, knowing myself, I view this as an opportunity to buy cheaper, since I’m not retiring anytime soon.”
Lewis also takes care not to monitor his retirement investments too closely, beyond looking “at a very high level” to make sure the accounts are in line with market performance and there’s nothing fraudulent happening.
“I do think it’s eventually going to go up,” he said, adding that his and his husband’s retirement funds are invested mainly in index funds.
Lewis expects his retirement to look different from that of his parents and grandparents. He sees himself working as a consultant through his 70s. “Think about it — you’re at kind of the pinnacle of your knowledge at a career, and then it just stops,” he said.
An only child, he regularly discusses investing with his mother. “I benefited from starting to have some level of financial literacy,” he said. “And having someone to ask questions and to bounce ideas off of.”
‘I don’t want to gamble’
For Stefan Shaw, retirement doesn’t mean quitting work. Instead, he believes retiring will allow him to choose the projects he wants most to work on and finds fulfilling.
“I want to be in a place where I don’t have to make any compromises in what kind of work I do and with whom I’m working,” Shaw, 54, said. “And I’m really close to that.”
But Shaw, who lives in Munich and runs his own philanthropy consulting business, has calculated what he and his wife consider the minimum amount of savings they must sustain to backstop this plan. And the recent volatility in the markets has prompted Shaw to keep a very close eye on the balances. He runs a weekly calculation to rebalance the portfolio and to make sure that even if stocks dropped an additional 50%, he and his wife would be able to maintain their current standard of living. He describes this as making sure they are still “in the green” — and if they are not, they will reduce their expenses.
“When the pandemic hit, actually, I was getting close to this breaking point with this 50% rule,” he said. “It didn’t look good.” At the time, his portfolio had 60% in equities. When the markets recovered, Shaw reallocated to a 50% weighting in stocks.
“I know that I’m leaving out some potential there, but I’d rather be on the safe side,” he said. “I don’t want to gamble.” (He said he would receive some income from a government-run pension eventually, but that “it’s not going to be substantial.”)
With prior work experience including consulting and art advising, Shaw said he had become confident from knowing he has lived off both fat and lean paychecks — and that he and his wife could readjust if need be.
“I know that even if I took a bad hit financially, there would be a way to cope,” he said.
‘I’m just going to hold my nose and work’
Dr. Melissa Yuan-Innes is a big believer in the movement known as FIRE — financial independence, retire early. An emergency room physician in her 40s who lives outside Ottawa, Ontario, she manages the unpredictability by working more hours — or spending less.
Her hours in the hospital have fluctuated over the past several years, an arrangement that helps her balance caring for her two children, now 16 and 11, and developing another career as a writer of medical thrillers. The FIRE approach — which involves maintaining frugal habits and socking away as much cash as possible — means she and her husband, an engineer, can sustain their lifestyle. At the moment, she works 10 to 20 hours a week in the ER but will clock more if necessary.
“I needed to rely on myself,” Yuan-Innes said. “I’m just going to hold my nose and work.”
Knowing she can get more work helps her remain detached from the market turns, she said.
“I ignore them,” she said. “If we need more money, we would just earn more money — I would rather not do that, so it’s sad, but it’s certainly not as hard as people who are getting paid minimum wage.”
She added: “I feel lucky — to sit and look at your portfolio just plays with your head.” Yet Yuan-Innes has seen the value of their bonds drop and will consider selling them later.
She eagerly acknowledges her background. “I recognize my privilege in having parents and grandparents who worked extremely hard before me,” Yuan-Innes said. “Lots of financial independence types will tell you they’re entirely self-made, unaware of advantages they’ve gained from their white privilege, gender, middle-class status, education, government or their relatives’ sacrifices.”
“We’re lucky we have enough money coming in to cover what’s going out,” she said.
‘We have short memories’
A lifelong news junkie, Leslie Westbrook clicked off the TV when the stock markets plunged this spring and all she saw was red.
Watching the crawl on her screen, she said, was stressful. “I sort of feel like your blood pressure follows,” said Westbrook, 69, of Carpinteria, California. “What’s going on in the stock market — we’re supposed to wait long range, but we have short memories, in some ways.”
Westbrook’s grandmother played a big role in piquing her interest in investing. Her grandmother worked as an accountant in the wholesale produce industry in Los Angeles and invested her own money, encouraging her family to think long term about their finances. And then there were grandma’s Christmas presents to young Leslie: paper stock certificates in companies like Ford Motor or Safeway. Westbrook sold those childhood stocks long ago, but the financial lesson endured, she said. She has an adviser to manage her retirement accounts, but says she enjoys trading a small individual retirement account she inherited from a friend.
“I consider the stock market like legal gambling,” she said.
For income, Westbrook relies on a combination of Social Security, earnings from her work as a freelance travel writer and a gig as an auction liaison. For that job, she has parlayed a background in art and antiques into helping clients consign special items to major auction houses; she earns a cut of sales. She also volunteers and is helping to organize a mural honoring her town’s Latino community.
“I’m a boomer, so you are thinking about, ‘How am I going to retire?’” she said. “And you know, if I knew when I was going to die, then it would go a lot better.”
‘We still have the dividend piece’
Steve Adams, 65, would like to retire in a few years from the software company where he works near Charlotte, North Carolina, and join his wife, Janet Wilson, 70, who is already retired. But amid stock-market swings, his full-time employment gives them breathing room and an opportunity to invest on the dip.
“The market’s been ridiculously overinflated for a number of years now, and it just needs a pullback so it can kind of self-correct,” Adams said. “It presents a pretty good buying opportunity.”
This capacity to see the bigger picture was hard-earned. Adams said they “got hit” during the 2008 financial crisis, but it prompted them to start working with a financial adviser. The adviser steered them toward dividend-generating equities, and over the past 14 years, they designed a portfolio with dividends that would cover their living expenses in retirement, he said.
“We have seen a decline in the value of the stocks, but we still have the dividend piece,” Adams said.
They also planned before Wilson’s retirement and paid off the mortgage on their house a couple of years ago.
“It’s nice, because you’ve got a safety net if everything goes to hell in a hand basket — as long as the real estate market stays strong, you can always do a reverse mortgage or something,” he said.
Adams also takes heart from knowing that his company is healthy. So far, he said, he hasn’t seen a slowdown in its revenues like he did in 2008.
“The goal is, if I can retire when I’m 67, we’ll have more than enough income per month,” he said. “I’ll miss some of the big paychecks, but it is what it is — I mean, I could drop dead in two years. I’d rather spend some time traveling.”
‘How much more time do I have left?’
COVID-19 upended Irvin Schonfeld’s work life in 2020. He contracted the disease in March that year, and three people close to him died from it that spring. That gut punch influenced him to retire about a year ago, and he left his post as a professor of psychology at City College and the Graduate Center of the City University of New York.
“I was thinking, ‘How much more time do I have left?’” he said. “And it was very hard — I have to tell you, I’m still ambivalent about having retired.”
Schonfeld, 74, of Brooklyn, is not so concerned about market movement, since he and his wife count themselves fortunate to have steady income from his pension (although it does not have cost of living increases, he notes). But he misses a job he loved and the colleagues and students whose company he enjoyed through a film club for lovers of classic cinema that he started. So he stays engaged in research and publishing. A native New Yorker, he has started writing a memoir about growing up in the Glenwood Houses project.
The choppy markets are on his mind, but after experiencing the financial crisis, Schonfeld and his wife decided to save at least two years of living expenses in cash to ride out a market decline. As the son of parents who lived through the Great Depression, preserving stability has been essential to his financial planning. His father was a postal clerk, and his mother was a part-time sales clerk at Abraham & Straus department store.
“They were of modest means, and I went to Brooklyn College because it was free, so I know what lower-middle-class life is like,” he said.
Schonfeld vividly recalls the New York fiscal pressures of the early 1990s, when the state cut his university’s budget and tenured professors lost their jobs.
“It was really scary, because my kids were in elementary school,” he said. “I knew there were bumpy roads ahead, and I didn’t let the prosperity that followed in the Obama years give me the illusion that I was made of Teflon.”
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