When is it Time NOT to Panic?

If you look at your phone or turn on the TV it’s hard to miss that the stock market is on a roller-coaster ride like you'd find at Canobie Lake Park. But most people knew this was going to happen eventually, even as they put their nest egg away for safe-keeping. Like death, taxes, and empty toilet paper shelves in supermarkets, there was always going to be that “big down day.”

We all know what’s causing the drop. No news bulletin there. The coronavirus has the world economy in its clutches and it’s squeezing it like some giant stress ball. Unfortunately, we are the ones feeling the stress. We felt it all during the Hong Kong Flu, AIDS Epidemic, Ebola, Swine Flu, Bird Flu, SARS, and now coronavirus. Each caused the market to sputter, but obla-di obla-da and the stock market eventually self-corrected. This is possibly why those folks who chose NOT to panic during the SARS epidemic in 2003 are now likely sitting happily in retirement on some faraway beach.

So, as events are being canceled, schools forego classes, and baseball players are not permitted to do high-fives, it’s only natural that you consider what effect this will have on your retirement? Hopefully, you have not fallen victim to the hysteria by locking yourself in your basement with nothing but powdered milk and hand sanitizers, leading you to make hasty and irrational financial choices.

If history is any indicator—and what else do we have to go on—the world will continue to spin and the market will return to reach new highs in the future. While the coronavirus may be wreaking havoc with markets in the short term, it will not likely change much about your finances over the long term.

Chances are that most people worrying about their retirement are over 60-years-old, retired, and most likely their retirement money is invested in annuities. And in times of uncertainty and unpredictability, annuities continue to shine with less risk and a guaranteed income for life, even as the local news stations proclaim doom and gloom.

The best advice I can give at the moment is to stay the course with your retirement plan. If you don’t have one, get one. Set it up and forget it. That way you are buying over time whether the stock market news is good or bad. The good news is the dip in the market appears to be mostly driven by panic. The bad news is that we don’t know how long it will take for this panic to run its course. 

As a society we are remarkably resilient, fueled by the encouraging news put out recently by the World Health Organization that in China—ground zero for the epidemic—there has been a steep decline in newly-reported cases of coronavirus. And at this point, we’ll take all the good news we can get.

Ryan Skinner is President of Summit Financial Partners in Woburn, MA rskinner@summitfinancialpartners.org