Remaining Calm During A Pandemic


By the time an investor retires, he or she hopefully has enough resources squared away and income-producing products lined up that they can live comfortably in their retirement. Most retired investors do not make any changes to their portfolios over time, much less make radical or reactionary alterations to their investments, even as others do.

What investors have experienced in the first quarter of 2020 is beyond the experiences of most investors, although the retired ones probably have vivid memories of recessionary times, including the recent Great Recession. Some of them may still recall how the economy was affected by World War II. The Great Depression is an occurrence now left to history books, although there are still some citizens who were born at that time.

Retired investors like to communicate with their financial advisors, but those conversations are more about comfort and contentment than they are about sweeping investment changes. Part of the reason investors set aside funds for retirement is so that they don’t have to worry about money when they are done working for a living. They can relax, actually retire from that part of everyday life.

So, it is not surprising that Spectrem research shows that, even in these trying times, retired investors have not made any overarching changes to their investment strategies and do not intend to make any such changes in the near future.

As part of Spectrem’s monthly research with investors, participants are asked a single question about current household decision-making, and the questions rotate every three months. For April, the question that was asked was “what is the most significant change or action you plan to take over the next 12 months to improve your financial well-being?”.

Thirty-seven percent of all investors said they planned to make no changes, preferring to wait out the storm and hope for a noticeable recovery over time. But, among retired investors, 48 percent said they plan to make no changes, compared to the 26 percent of working investors who plan no changes. Among those working, 23 percent planned to invest more, hoping to take advantage of low stock market prices.

The one notable response among retired investors other than “make no changes’’ was the 13 percent who said they planned to change their spending habits. Some of that change is perhaps forced upon them, as no one is currently spending money going out to eat or to be entertained. But, retired investors do like to travel, and that is something they are not doing in the spring of 2020 and there is a great deal of question how much travel Americans will be doing the remainder of the year as the battle against the coronavirus continues.

Only 10 percent of retired investors said they plan to invest more, while 6 percent said they planned to save more. Those reactions both make some sort of sense, but are unusual reactions among investors who prefer to have a static portfolio, as most retirees do.



©Spectrem 2020

Keywords: financial planning, allocations, Investor, advisor, Spectrem, retired, index, confidence