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 on Wednesday; gross domestic product, which we learned on Thursday had fallen for the second consecutive quarter; and the stock market, which has been jumping 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 numbers is of course linked to individual plans.
The New York Times wanted to know how this uncertain moment is affecting you and how you managed your retirement savings and investments.
Hundreds of you all over the world answered our questions. Some readers had specific questions, such as when to claim social security. But others, like these six, offered a broader view of their personal relationships and how they tried to find balance.
At a moment when many feel a disconnect between the macro and the personal — recent polls showed a general unease among voters about the economy, even as some see stability in their own lives — these readers’ experiences show that there are a number of ways to deal with it.
“I see this as an opportunity to buy cheaper”
It is only now that Michael Lewis can realize the value of having John C. Bogle, the founder of Vanguard, as his first speaker. At the time, Mr. Bogle’s influential investment advice for ordinary Americans didn’t mean much to the teenage Mr. Lewis, who works as a director of market 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 much later,” said Mr. Lewis, 41, of Berkeley, California. “It didn’t even sink in until I was out of college and started investing with them.”
The recent market uncertainty has not rattled him the way the 2008 crisis did. He remembers the mistakes he made last time, selling mutual funds at a loss.
“Basically, what it told me was, ‘Just don’t do anything,'” he said. “And actually, knowing myself, I see this as an opportunity to buy cheaper, since I’m not retiring anytime soon.”
Mr. Lewis is also careful 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 nothing fraudulent is going on.
“I think eventually it’s going to go up,” he said, adding that his and his husband’s retirement funds are mainly invested in index funds.
Mr. Lewis expects his retirement to look different from that of his parents and grandparents. He sees himself as a consultant through the 70s. “Think about it — you’re kind of at the peak of your knowledge in a career, and then it just stops,” he said.
As an only child, he regularly discusses investment with his mother. “I benefited from starting to have some level of financial literacy,” he said. “And to have someone to ask questions and bounce ideas off of.”
A guide for investors
The decline in the share and bond markets this year has been painful. And it is still difficult to predict what is in store for the future.
“I don’t want to gamble”
For Stefan Shaw, retirement does not mean stopping work. Instead, he believes retiring will allow him to choose the projects he most wants to work on and finds fulfilling.
“I want to be in a place where I don’t have to compromise the kind of work I do and who I work with,” said Mr. Shaw, 54. “And I’m very close to that.”
But Mr. Shaw, who lives in Munich and runs his own philanthropy consulting business, has calculated what he and his wife consider the minimum amount they must maintain to stop this plan. And the recent volatility in the markets has caused Mr. Shaw to keep a very close eye on balance sheets. He runs a weekly calculation to rebalance the portfolio and to ensure that even if stocks fell another 50 percent, he and his wife would be able to maintain their current standard of living. He describes this as making sure they’re still “in the green” – and if they’re not, they’ll reduce their spending.
“When the pandemic hit, I was actually close to this breaking point with this 50 percent rule,” he said. “It didn’t look good.” At the time, his portfolio was 60 percent in stocks. When the markets recovered, Mr. Shaw reallocated to a 50 percent weight in stocks.
“I know 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 get some income from a state-run pension eventually, but that “it’s not going to be significant.”)
With previous work experience including consulting and art consultancy, Mr Shaw said he had taken comfort in knowing he has lived on both fat and lean paychecks – and that he and his wife could adjust if necessary.
“I know that even if I took a hard hit financially, there would be a way to deal with it,” he said.
“I’ll just hold my nose and work”
Dr. Melissa Yuan-Innes is a big believer in the movement known as FOUR — financial independence, retire early. An emergency room doctor in his 40s who lives outside Ottawa deals with the unpredictability of working more hours – or spending less.
Her hours at the hospital have fluctuated in recent years, an arrangement that helps her balance caring for her two children, now 16 and 11, and developing a second career as a writer of medical thrillers. The FIRE approach – which involves maintaining frugal habits and taking away as much money as possible – means she and her husband, an engineer, can maintain their lifestyle. Currently, she works 10 to 20 hours a week in the emergency department, but wants to clock more if needed.
“I needed to trust myself,” Dr. Yuan-Innes said. “I’ll just hold my nose and work.”
Knowing that she can get more work helps her stay detached from the vicissitudes of the market, she said.
“I ignore them,” she said. “If we need more money, we’ll just make more money – I’d rather not do that, so it’s sad, but it’s certainly not as difficult as people who are paid the minimum wage.”
She added: “I feel lucky – sitting and looking at your portfolio just plays with your head.” Nevertheless, Dr. Yuan-Innes has seen the value of their bonds fall 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,” said Dr. Yuan-Innes. “Many types of economic independence will tell you that they are entirely self-made, unaware of the benefits they have derived from their white privilege, gender, middle-class status, education, government, or the sacrifices of their relatives.”
“We’re fortunate that we have enough money coming in to cover what’s going on,” she said.
“We Have Short Memories”
Leslie Westbrook, a lifelong news junkie, clicked off the TV when the stock market plunged this spring and all she saw was red.
It was stressful to see the creep on her screen, she said. “I kind of feel like your blood pressure follows,” said Westbrook, 69, of Carpinteria, California. “What happens in the stock market – we will wait a long time, but we have short memories, in some cases ways.”
Mrs. Westbrook’s grandmother played a big role in sparking her interest in investing. Her grandmother worked as an accountant in the wholesale industry in Los Angeles and invested her own money, encouraging the family to think long term about their finances. And then there were grandma’s Christmas presents for young Leslie: paper stock certificates in companies like Ford Motor or Safeway. Mrs. Westbrook sold those children’s stocks long ago, but the financial lesson endured, she said. She has an advisor manage her retirement accounts, but says she likes to trade a small IRA she inherited from a friend.
“I consider the stock market legal gambling,” she said.
For income, Ms. Westbrook relies on a combination of Social Security, income from her work as a freelance travel writer and a gig as an auctioneer. For that job, she has used a background in art and antiques to help clients consign special items to major auction houses; she earns a cut of the sale. She also volunteers and helps organize a mural honoring the city’s Latino community.
“I’m a boomer, so you think, ‘How am I going to retire?'” she said. “And you know, if I knew when I was going to die, it would have gone a lot better.”
“We still have the dividend piece”
Steve Adams, 65, wants to retire in a few years from the software company where he works near Charlotte, NC, and join his wife, Janet Wilson, 70, who is already retired. But amid stock market fluctuations, his full-time employment gives them breathing space and an opportunity to invest in downturns.
“The market has been ridiculously overinflated for several years now, and it just needs a pullback so it can kind of correct itself,” Adams said. “It makes for a pretty good buying opportunity.”
This capacity to see the bigger picture was hard earned. Mr 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-producing stocks, and over the past 14 years they designed a portfolio with dividends that would cover their living expenses in retirement, he said.
“We’ve seen a decline in the value of the shares, but we still have the dividend bite,” Adams said.
They also planned ahead of Janet’s retirement and paid off the mortgage on their house a couple of years ago.
“It’s nice, because you have a safety net if everything goes to hell in a handbasket — as long as the real estate market stays strong, you can always do a reverse mortgage or something,” he said.
Mr. Adams also takes heart knowing his company is healthy. So far, he said, he hasn’t seen a decline in revenue 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’m going to miss some of the big paychecks, but it is what it is – I mean, I could be dead in two years. I would rather spend some time traveling.”
“How much more time do I have left?”
Covid changed the working life of Irvin Schonfeld in 2020. He contracted the disease in March of that year, and three people close to him died from it that spring. That gut punch influenced him to retire about a year ago, leaving his position as professor of psychology at City College and the Graduate Center of the City University of New York.
“I thought, ‘How much more time do I have left?'” he said. “And it was very difficult – I have to tell you, I’m still ambivalent about having retired.”
Professor Schonfeld, 74, of Brooklyn, isn’t too concerned with market movements, as he and his wife count themselves lucky to have a steady income from his pension (though it doesn’t add to the cost of living, 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 remains engaged in research and publishing. A native New Yorker, he has begun writing a memoir about growing up in the Glenwood Houses project.
He thinks about the choppy markets, but after experiencing the financial crisis, Professor Schonfeld and his wife decided to save at least two years of living expenses in cash to ride out a market downturn. As the son of parents who lived through the Great Depression, maintaining stability has been essential to his financial planning. His father was a post office clerk, and his mother was a part-time clerk at the department store Abraham & Straus.
“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.
Professor Schonfeld vividly recalls the fiscal pressure in New York in the early 1990s, when the state cut the university’s budget and tenured professors lost their jobs.
“It was very 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 the Obama years give me the illusion that I was made of Teflon.”