It’s hard not to panic about your retirement plan when the stock market is taking you for a roller-coaster ride that you would rather not be on, courtesy of the novel coronavirus.

You watch as various benchmark indexes — the Standard & Poor’s 500-stock index, the Dow Jones industrial average — dramatically dip down, only to soar the next day. In March, the market just cratered. But by the end of June, stocks closed out the best quarter since 1998. Last week, Wall Street closed out its fourth straight winning month. Yet, “markets continued to show caution, with the 10-year Treasury yield touching its lowest level since March,” the Associated Press reported.

If you have 10 years or more to retirement, the ups and downs of the stock market could stabilize and give you a good return.

“Stocks are reliable if you have a time horizon of 10 years or longer,” Christine Benz, director of personal finance for Morningstar, said in response to readers questioning staying in stocks. “When we look at Morningstar’s database for ‘rolling’ 10-year returns of the S&P 500 — meaning May 2010 to May 2020, June 2010 to June 2020 and so on — there have been 23 10-year periods when stocks are negative, out of 891 10-year observations since 1936. Most of those bad 10-year periods occurred during the last financial crisis, and most of the losses were quite small. The worst was March 1999 to March 2009, when the S&P 500 lost 3.42 percent on an annualized basis. Of course, there have been plenty of periods in modern market history when stocks were in the black but would have underperformed other asset classes, especially bonds. But starting bond yields are so low that it’s difficult to imagine that being the case going forward, at least for the next 10 years or so."

She continued: “People who are drawing upon their portfolios in retirement, or for any other near-term goal, are usually better off keeping those near-term spending needs in the safe stuff — cash and bonds. That’s because when we look at stocks’ rolling-period returns over shorter increments — say, three years or five years — stocks are too unreliable; the probability of loss — and in turn, the risk that you’d need to sell your stocks when they’re in a trough — is too high for comfort. That risk is arguably enhanced today given the comeback that stocks have mounted since bottoming in late March and given the pandemic and its related economic effects.”

So, if you’re within a few years of retiring or if you’re retired, it’s understandable that you’re still worried about losses for funds you need in the near future. As The Washington Post’s New Rules of Retirement explored, the coronavirus economy is causing a lot of concern, with many people wondering if they should abandon investing in the stock market or greatly reduce their equity holdings.

In the second part of a previous discussion with Benz about why you need stocks in your 401(k), she responded to some of the most frequently asked questions from people concerned about their retirement plans.

Q: How do you combat the fear of investing?

A: Remember that market volatility is the cost of doing business. The prospect of losses is why stocks have historically had higher returns than other asset classes; investors who have been willing to put up with the possibility of short-term losses have historically done better than investors in safer asset classes, such as cash and bonds.

Giving due attention to your portfolio’s setup in the first place can also help you feel more comfortable and prepared during market downdrafts. That means making sure that you have an adequate allocation to cash and bonds to cover your near-term spending needs. It also helps to use ultra-well-diversified, low-cost building blocks for your portfolio’s core. That way, it won’t be unduly buffeted around by the performance of a few volatile holdings.

Q: How can you weather turbulence in the stock market if you are near retirement or retired?

A: For people who are no longer working and earning paychecks, market volatility can be incredibly unnerving. In contrast with people who are still adding to their portfolios, retirees’ assets are a finite resource. So, one of the key things you can do to cope is to make sure that you’re not taking out more of your portfolio than you need to during periods of market weakness. That will leave more of your portfolio in place to recover when the market eventually does. In fact, much of the great research that has been done on “sustainable” retirement withdrawal strategies points to the value of being at least somewhat flexible with your portfolio withdrawals, taking less in down markets if you can afford to do so.

When it comes to your portfolio, by locking down your near- and intermediate-term cash flow needs in safe investments, you should feel more patient with and less nervous about your long-term investments, because you’ve bought yourself lots of time to recover.

Also, as a psychological coping strategy, it’s a great idea to step away from the news flow on the market and the economy. Watching the market’s moment-by-moment gyrations is apt to make you feel nervous or, worse yet, might tempt you to make changes that you later regret. Embrace distractions other than the market if you can — reading a good book, taking a walk or trying out a new recipe.

Q: During the Great Recession, many people panicked and sold all their stock holdings. Many people are feeling the same way now. Should they bail on the stock market?

A: While stocks experienced big losses from late 2007 to early 2009, shedding 57 percent of their value, they followed up with tremendous gains over the subsequent decade, gaining nearly 14 percent per year over the past decade. Selling out of stocks can provide short-term relief amid periods of economic or market anxiety, but it’s immediately replaced with another nagging worry: Is it time to get back in? And when the market begins to show signs of life and you’re hemming and hawing, it often recovers very quickly, often in the space of just a few days and weeks. So, there can be a huge opportunity cost in trying to time the market. Even in the late stages of the current bull market, I was still hearing from investors who had never gotten off their defensive crouch from the last bear market. In the process, they had missed some tremendous gains.

Q: If you are near retirement, should you get out of equities?

A: There’s no one-size-fits-all advice, but generally not. That’s because retirement for many of us will last for 20 or 30 years or even longer. That means that you absolutely need the growth potential that stocks can provide. Also, there are risks in being too conservative with your portfolio, too. If you hunker down in cash and bonds yielding just 1 percent or 2 percent, your portfolio’s returns may not even keep up with inflation, meaning your spending power from that portfolio is declining at a time when you need it to grow. And remember, most of us enter retirement with at least one or maybe even a few “safe” assets beyond our portfolios — Social Security or pensions, for example. The presence of those safer sources of income should reduce your need to keep your whole portfolio safe, because you’re not spending it all at once.

Color of Money Online Chat

Join me on Thursday, Aug. 6, for a discussion about debt collection during the pandemic. My guests will be Ariel Levinson-Waldman, president and director-counsel for Tzedek DC, and Linda Coe, staff attorney at Tzedek DC, an independent public interest center that provides free legal help to D.C. residents facing debt collection, consumer or credit problems.

Reader Question of the Week

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

Q: I live in a nursing home. All my income goes to the nursing home except $40 a month. Someone claimed me on their income return without my permission, which keeps me from getting a stimulus payment. What can I do?

A: Many people were surprised to find out they were not entitled to the up to $1,200 stimulus payment under the Coronavirus Aid, Relief, and Economic Security (Cares) Act because they were claimed as a dependent on someone else’s tax return. If you are a dependent, you cannot receive an economic impact payment.

Read IRS Publication 501 to determine if someone can claim you as a qualifying relative. If not, file your own return claiming yourself. The IRS will contact you and the person who claimed you as a dependent to straighten the matter out.

If someone claimed you incorrectly, and you qualify for a stimulus payment at this point, you should receive the money. But, just a warning: This may take some time. And “be sure to file by October 15 of this year,” said IRS spokesman Eric Smith. “Otherwise, you still have a shot to get the stimulus payment when you file a 2020 return next year.”

Retirement Rants and Raves

I’m interested in your experiences or concerns about retirement or aging. You can rant or rave. Send your comments to Please include your name, city and state. In the subject line, put “Retirement Rants and Raves.”