Avoiding Retirement Income Panic

Well, the market meltdown reminds me how great it is to be a retired dividend investor. Because…

I am unexpectedly fortunate to be retired. In this pandemic, I do not have a job to go to nor do I need to contend with commuting, people in the office, or any of the many social contacting that that would entail.

Financially, I am unexpectedly fortunate. Being a dividend investor allows me to not get bent out of shape during a market meltdown. I do not have a strong vested interest in stock prices. What is on my mind is dividends. As long as dividends continue, the lower the stock price the better, as lower prices mean that I buy more shares with my dividend money.

Of course, in the face of a severe downturn in overall economic activity, it is probable that some companies will reduce or even eliminate their dividends. This is a difficulty that occurs when economic conditions dictate. As previously mentioned, Volatility, Thy Name Is Capitalism.

It is impossible to avoid volatility of all kinds. For example, if one avoided the stock market entirely, one can still experience volatility: just try to buy face masks and surgical gloves in the heat of the virus panic. One could invest in bonds but therein has been extremely low interest rates, and a volatility of their own.

Qianlong Emperor. 1736
Qianlong Emperor. 1736

Recently I read some blogs where people said they invest in real estate to avoid stock market volatility. This is partially true. Income producing real estate does not have the same issues as stocks; they have their own issues. Tenants come with their own problems, some will lose their jobs if economic activity suffers too greatly. And let’s not forget the housing market problems of the Great Recession.

It’s Alive!
Just being alive means living with the ups and downs of life. This includes emotional, psychological, and yes, financial, volatility. Anyone who believed that things were always going be smooth sailing is delusional. In the face of bad news, we can best recall This Too Shall Pass.

I’m old enough that my parents, and their peers, all lived through the Great Depression and World War II. While those events sometimes all seemed so far away in the distant past, it was still alive to those who lived through them. Both those events were incredibly difficult for those that lived them. It shaped who they were and how they lived the rest of their lives. And the events that we all live though now are not only shaping our lives now, but will continue to shape our lives.

Staying Here
So my take on all of this is to take care of myself and those close. Do the right thing and be aware of what to do and not to do. We are self-quarantining (is that a word?). We are not “preppers,” but as frugal types we usually buy in bulk when we find things on sale, so we do have enough for a while.

How Long Will It Last?
I have no idea. No one knows. We all watch and wait. Two things come to mind.

In one Dilbert cartoon, Wally proclaims: “It may look like I am doing nothing, but I am waiting for things to change.” (A later version of this cartoon involves Bob the Dinosaur and Asok. Same principle.)

In the poem On Blindness, Milton says “They also serve who only stand and wait.”

Q. Aren’t you invested in mutual funds that have obviously declined?
A. Yes and yes. So far, it seems the main purpose of the mutual funds in my IRAs are to provide numbers from which to calculate my RMDs, and thus the subsequent taxes.

What’s up with your attitude these days? Comment here.

The portrait of Qianlong, Emperor of China, was made in 1736 by the Italian Jesuit missionary, Giuseppe Castiglione. Courtesy Cleveland Museum of Art.

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