“The best-laid plans of mice and men often go awry.” When Robert Burns wrote those famous words in 1786, he may well have been looking into the future to May of 2020. By the time the Coronavirus has runs its course, Burns’ words will likely have a profound meaning to millions of baby boomers (born between 1946 to 1964) who are in or headed towards retirement.
Along with attacking the health of Americans and people all over the world, the Covid-19 virus has been the proximate cause of a devastated economy in the U.S. In just three short months, the damage has been profound enough that it will surely leave the country digging out of its economic hole for months, probably years. Also, it has likely caused an equal amount of devastation to baby boomers who are retired or close to retiring.
The following discussion is going to center on the ways the Coronavirus will likely have affected the retirement plans for the boomers moving forward.
Adjustments Needed to Their Future Standard of Living
The impact of the current pandemic could well impact boomers more than any other age group. It’s a valid assumption because boomers are going to have less time to recover economically from the impending recession. It’s a recession that is going to affect the standard of living today and into the future for most people.
It’s important to remember that the boomers are the ones who have been operating a lot of the nation’s small businesses. They are the ones who have been in business for 15 to 20 years, acquiring a certain standard of living in the process. For the boomers who have been working as employees, they have also invested a lot of time building towards their golden years. Care to guess which age group might be most affected by permanent layoffs?
Because of the economic shutdown, these are the two groups of folks who are most likely to close their businesses down for good and not return to the workforce. For most of them, there is neither enough time or energy remaining in their lives to start over. Without the ability to generate more income for the future, all they can do going forward is to make adjustments. Most of those adjustments will likely involve lowering their standard of living to something lower than what they anticipated just three short months ago.
A More Cautious Approach to Investing in the Future
History will make it impossible to talk about the Covid-19 pandemic without discussing the impact it had on the stock market. From an S&P 500 high of 3,386 on February 19, 2020, to a recent low of 2,237 on March 23, there was a lot of panic buying going on to drive prices down so far, so fast. It’s a good bet nervous boomers were caught in the middle of the panic selling as they attempted to salvage as much of their retirement-funds as possible.
For the panic sellers already retired, it’s reasonable to believe they might feel it no longer makes sense to take investment risks with so much uncertainty surrounding any impending recovery. Keep in mind the Trump administration will be doing everything possible to bring about economic recovery as fast as possible.
For the boomers who are closing in one their days of leisure, the thought of investing in stocks is probably only slightly more appealing. That’s despite the fact the S&P 500 has already recovered by as much as 70% since the selloff.
For anyone who might still be interested in investing going forward, it’s a good bet a more cautious approach to investing is on the docket. Investments are likely to flow more towards interest-bearing cash accounts, bonds, mutual funds, and precious metals instead of investing in individual securities.
Extening the Time Boomers Will Need to Spend in the Workforce
There will be boomers who reopen their businesses or go back to work. That’s good news. If there’s any bad news on the horizon, it might be that many of these people will have to consider working more years than they had originally intended.
Understandably, many of these people will feel disappointed. Just three months ago, they had a plan for the future. After retiring, they were going to pursue certain goals like spending more time with family and maybe doing a little traveling. If they lost economic wealth because of the pandemic, they can either adjust their goals or add a few more years of work and keep their goals intact.
Changes in the Attitudes Towards Assisted Care Living
As of May 30, 2020, Forty-three percent (43%) of all U.S. virus-related deaths occurred in assisted living facilities. This will likely go down as one of the biggest tragedies surrounding the pandemic.
For a generation of people who believed assisted living was a good alternative for them in their later years, it’s highly likely those opinions have changed. There’s now a new level of fear about just how safe these facilities are when so many can die in such a short period.
Of course, a lot of mistakes have been made about sending the sick into these facilities in the first place. Those mistakes will surely lead to new legislation and healthcare guidelines for assisted living facilities in the future. Regardless of the changes that are coming, it’s going to take a long time for children to feel secure about putting their parents in homes. The only upside to this is family members will learn to depend on each other more than in decades gone past.
Less Focus on Leisure Activities and the Enjoyment of Life
With nothing more than Social Security and potentially fewer savings in the bank, it’s a good bet retirees will be spending less on their leisure activities. The trips they have been planning for years might be a thing of the past. Buying a boat or a vacation home is likely no longer feasible. The notion of paying off the mortgage might need some rethinking. More retirees might even have to think of ways to finance their futures by taking out loans against their assets.
As a nation, we can assume it will take several years before we can accurately assess the total impact of the virus pandemic. Between now and then, boomers will have to make new decisions to replace decisions they probably made long ago. That’s a shame.
