Was I right?

I’m still thousands of mile away from the US somewhere in the Pacific Ocean. That’s no longer being out of touch, but it could be worse because it’s harder to determine what’s real and what’s not.

Now that a social, economic and financial crisis is upon us, we suddenly have our eyes open as to what can happen, perhaps in a worse case scenario.

For years we have been told spend prudently, avoid or at least manage debt, have an emergency fund, and save for the future. Based on age, to one degree or another, that advice has been ignored usually based on “I can’t.”

While not mainstream, I always advocated retiring with 100% income replacement, an emergency fund and the ongoing ability to save during retirement even if only to replenish the emergency fund.

If you are relying on income from investments, wouldn’t it be nice to avoid using that money for the next year and instead use accumulated cash or even cashing in a few old savings bonds?

Those of us with a fiscally conservative view of life, who reject live for today spending, who attempt to reasonably plan for every contingency, are often criticized for missing out on life along the way. There are even a few so-called experts who claim many people save too much.

At least for some, 2020 is going to open their eyes and change their ways. Hey, tattoo parlors are closed, there’s a potential saving opportunity.


  1. Dick, I’m so glad I listened to everything you said over the years because I’m comfortable and content now. Wouldn’t it be nice if the government and employers considered reinstating pension plans again because we never know what the future holds. People who can’t save much money while they are working, would at least have a pension and social security to carry them through retirement regardless of what the stock market does. I know there are no guarantees but I do think we should take all this into consideration and plan a little differently because there are a lot of old, I mean young, people out there. I hope the boat can dock soon and you can get home without any problems. In the meantime, stay safe!


    1. We expect to see many DB plans freeze or terminate after taking significant investment losses. If underfunded, the liability is dumped on the remainder of plans, insured by the PBGC, potentially creating a cascading impact (see multiemployer plans for comparison).

      Pension promises without adequate funding are mere dreams.


      1. So true, so sad and many plans will take advantage of the opportunity to dump plans and at the same time the very visible risks of investing will scare the hell out of people.


  2. Hey, Dick, given interest rates, this is, for some retirees, a classic “sequence of returns risk scenario”, that suggests people may want to consider liquidity via a HELIC or reverse. Good topic for a blog at sea.

    Stay safe. Jack


  3. I think this crisis is going to cause some new retirement / investment “advice” for people who are depended totally on 401Ks. You have not lost a thing in your 401k until the day you sell. The market may take a few years to recover like in 2008. But what if you were going to retire this year or you are already retired. If you were planning to withdraw using the 4% rule of thumb, you may need to withdraw 12% to get the same amount of cash which will destroy your portfolio.

    I am lucky because I have a pension and have not touched my 401K, yet. I have paper losses that I could have lost a McMansion. I wonder what the people who only have a few thousand are going to do if the market doesn’t at least stabilize and start rebounding in a few months?

    All my kids are out of work and the question of pay will be answered soon. I heard a story of one person who thought he was laid off. The state verified his claim with his employer and the employer said he wasn’t laid off but he just wasn’t assigned any work hours that week. Claim denied.

    Since my income is secure, I am doing my part by spending as much as I can by ordering out and buying non virus things that I needed buy but wasn’t necessary going to buy this month or next. Those restaurants and retail stores that are still open, as well as the mom and pop shops are going to have a cash flow problem in a month or two. No government promise of money is going to keep them from failing. I can still get stuff from them without being in a crowded line in a store. Emergency fund or not, an unemployment crisis might follow after the virus crisis has ended. I’ll have to curtail my spending in the summer hopefully after everybody else is back to work spending money again.


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