The Washington PostDemocracy Dies in Darkness

How do you not panic about what’s happening to your retirement account? Just don’t look.


I haven’t looked at my 401(k) retirement account since the stock market began its nose-dive in response to the spread of the coronavirus in the United States.

With the constant four-digit drops in the Dow Jones industrial average, I’ve been tempted to see how much I’ve lost — at least on paper. But I’m not planning to make any changes, so there’s no reason to check how it’s doing.

“I’ve lost $70,000 in the past 20 days,” a friend wrote after she couldn’t resist looking.

She’s several years away from retirement and has a solid financial plan — and savings. She promised to stop checking out her 401(k).

“My feet are planted in faith,” she said after we talked.

During a recent online discussion, I got this note from a reader: “I am incredibly glad that I have more than 15 years before the first kid is in college and about 30 years until I retire. I can just avoid looking at my investments right now.”

Some things are better left unseen. If you have a good long-term investment plan in place and you’re years away from having to tap your retirement funds, don’t keep checking on how the daily stock swings are affecting your retirement account. It’s like when you ride a roller coaster: Close your eyes if you don’t want to see the fall. And remember that, eventually, the wild ride ends.

“If you have a diversified portfolio in line with your goals and time horizon, such as a target-date fund and other smartly constructed portfolio, do not change course,” said Dan Keady, chief financial planning strategist at TIAA. Time is on your side. “Bear markets can be an ideal time to increase contributions to your workplace plan since you are buying cheaper shares. This can benefit you when the market recovers. If you can, try to increase your contribution now, even if it is not intuitive.”

It’s no question that these are scary times, but don’t let fear drive your financial decisions. Also, things are constantly changing.

On Friday, after President Trump declared a national emergency and said that certain measures would be implemented to improve testing for covid-19, the Dow Jones industrial average jumped nearly 2,000 points, or about 10 percent. Earlier in the day on Friday, a 1,200-point rally was erased by midday only to end up in positive territory.

The Standard & Poor’s 500-stock index and the Nasdaq also shot up on Friday, making it Wall Street’s biggest rally since 2008.

“Friday’s moves were in line with the hyperactive trading on display all week,” The Washington Post reported.

Commenting on the market, David Donabedian, chief investment officer of CIBC Private Wealth Management, wrote: “The day-to-day volatility is a sign that investors don’t know what to do.”

Last week, my colleague Heather Long, an economics correspondent for The Post, joined me for my weekly online discussion. Here are some answers for worried investors.

Q: How much longer are the stock markets going to decline? How great is the decline going to be?

Long: No one knows, and that’s part of the fear that is feeding the markets to go even lower, sinking into an official “bear market.”

The key is how long will this health crisis last? How many people will be impacted? And how quickly can the economy bounce back? Right now, no one has enough data to answer those questions, so the market is pricing in the worst-case scenario. What pretty much every economist and Wall Street type I’ve spoken to has said today is this: The United States should basically do a two-week shutdown, similar to Italy. It will be painful. And it will require government help for people not working and businesses really hurt. But the hope is that would stop the flow of covid-19 and boost confidence in the U.S. government’s response to this crisis.

Q: How worried should we be?

Long: The United States is in a bear market, and it’s almost certain Q2 will be negative growth. The question is whether the United States will go into a recession (two consecutive quarters of negative growth).

The reason there is such high concern on Wall Street today is investors don’t think the government response is sufficient — from Congress or the White House. Here is the list of worries:

1. Coronavirus spread.

2. Oil price war.

3. Inadequate government response.

If we could cross all three off the worry list, it would help enormously. If we could cross one off the worry list, we would have relatively few worries. So the key in the coming days is whether Congress can set aside partisanship and pass a fiscal stimulus bill and whether the White House and Congress can backstop the health system sufficiently to start halting the spread of the virus. That’s a big if. But let’s hope it can be done.

Q: What market segments will be most likely to weather the uncertainty we are seeing now? I would think people will keep using their mobile phones and online services, whereas cruise ships will take a while to come back.

Long: Yup. You got it. This is the Clorox and Netflix economy right now. The other somewhat surprising winner in all of this is real estate. Mortgage and refinance applications are through the roof. The 30-year fixed rate hit an all-time low of 3.29 percent, so housing and home-related stocks and parts of the economy are likely to do well. I was just talking to a roofer. His business is down this week, but he’s got a lot of people calling and telling him they want him at their place as soon as this health crisis subsides.

There were a lot of good questions in last week’s chat. Here’s the full transcript of the discussion.

Reader Question of the Week

If you have a retirement question, send it to In the subject line, put “Question of the Week.”

Q: I don’t have a pension. I am 56 years old. I am considering purchasing a rental and becoming a landlord. This will provide me with monthly income, which would carry me into retirement and cover long-term-care income if I am unable to work. What are your feelings?

A: While real estate investing can pay off for a lot of people, you need to be prepared for the ups and downs of owning investment property.

For example, what would you do during periods where you don’t have a renter? Will you be able to cover the mortgage if your renter falls behind on his or her monthly payments? Will you have enough in savings to cover major maintenance issues, such as a broken water heater?

Here’s something else to consider: Will you manage the property yourself? If not, can you collect enough rent to afford a property manager?

Ilyce Glink, author of “100 Questions Every First-Time Home Buyer Should Ask,” which I reviewed for the Color of Money Book Club, wrote a column addressing a lot of the questions first-time landlords need to ask. She has also written about the upsides and downsides of becoming a landlord in retirement.

Run the numbers, Glink urges, writing: “It’s risky to put too much faith in the power of real estate. There are no assurances for anything; but given what we have lived through from before the Great Recession through today, you could see real estate and stock values plummet but then rise again. Some real estate has done better than others and some stocks have done better than others.”

Before you decide to go down this road, be sure that you know what you are getting into and that you are prepared for times when you don’t have the rental income you need.

Retirement Rants and Raves

Your thoughts: Thanks to the Secure Act, many seniors now don’t have to take their required minimum distribution (RMD) until 72. They may be grateful for this reprieve given the current stock market.

But many others, who fall under the old rule for RMDs, will be forced to withdraw money this year from an IRA and/or workplace retirement plan, such as a 401(k), during a tough time in the stock market.

The last time the stock market saw declines like we’re experiencing, Congress suspended RMDs for one year. Because of the dramatic decline in retirements accounts, RMDs due in 2009 were suspended. The waiver also applied for people who turned 70½ in 2009 but decided to delay their withdrawal until April 1, 2010.

I’m sure such a waiver for RMDs due this year would be a welcome relief to many people who are looking at taking withdrawals when their retirement accounts have experienced major declines.

I’d like to hear from you. How do you feel about having to take a RMD in a bear market? Send your comments to Please include your name, city and state. Put “RMD” in the subject line.

Last week, I asked: How is your own retirement account doing? What moves, if any, have you made?

Carol Haworth of Greeley, Colo., wrote: “We are recently retired, and we’re fortunate to have the paid advice of a certified financial planner. About 70 percent to 75 percent of our funds were invested in low-risk funds, while 25 percent to 30 percent were in stock funds based on the advice we received. Almost all of our savings were accrued in 401(k) savings accounts. We’re down about 3 percent on our investments so far. In 2008, we lost about 40 percent of what we had in our plans. Luckily, we “stayed the course” and kept adding to our retirement funds to get us to our target investment point upon retirement. I have to admit, I’m pretty scared right now, but I was in 2008, also. I don’t think we’ll do anything drastic with our savings.”

“My career was in the biotech industry, and I have some familiarity with the way epidemics work,” wrote Steve Harwood from Oregon. “I sold all my equity positions as soon as it became clear there would be an epidemic in the United States. I kept my 10 percent position in a 10-year government bond fund. This has worked great so far, but I am faced with the quandary of when to get back into equities.”

Linda Karell, 59, from Montana, wrote: “I am fortunate to enjoy my job, so I plan to work to 68, perhaps part time a couple years after that, good health willing, of course. I figure I have eight to 10 years, so I’m being an ostrich. I haven’t looked at my balance. I went into a conservative stance after the 2016 election (and would have done so regardless of who won) because it’s emotionally harder for me to lose gains than it is to forgo them. Not necessarily the best long-term strategy, but listening to my gut has served me well to let me sleep at night. And right now, I’m grateful, but I’m still not looking at my balances.”