EDITOR’S NOTE: This article is adapted from the 2021 edition of Northern Nevada Smart Money, a specialty magazine of the Northern Nevada Business Weekly, the 4th edition of which inserted for subscribers in the Wednesday, March 24, 2021, edition. You may also view the digital edition here.
“And that’s a bad thing to do,” he explained. “Hoarding those funds for what might happen is always a bad idea because when those funds are in there, they’re better able to grow for you; they’re better able to provide for you longer term.
“Yeah, there was a bunch of volatility in the market but, really, the market has come back very strongly,” he continued. “Plus, I would always point out to colleagues and clients of mine, no matter what, the market’s still going to outperform putting it under your mattress or a shoebox somewhere.”
Zach Boyd, a tax manager at Eide Bailly in Reno, agrees.
“If you’re financing your retirement, make sure that you’re putting your money away because the market returns are pretty good,” Boyd said. “There’s really nowhere else to put your money — with interest rates being low, bonds don’t make sense. You might as well throw it in stocks. That’s the thing, there’s always money pumped into the economy, so there’s always a lot of cash floating out there right now.”
Some people may be tempted to “get rich quick” and jump into day trading due to the volatility in the stock market. Boyd suggests resisting the urge to sell.
“It’s making sure that you’re disciplined with your plan, and making sure that you don’t panic and sell,” he said. “I would advise to not be too aggressive and not think you’re a professional trader.”
Boyd said that some older workers and near-retirees that stayed with their stock portfolio possibly had their retirement plans accelerated by the pandemic.
Others, Saylor said, may retire early because of the unique health barriers posed by the coronavirus.
“They’re going to look at it and say, this is enough, I’ve worked 40 years and I don’t need to work another couple years under whatever the new normal looks like,” he said. “There’s some people who may come out of the labor market and retire early.”
In the third quarter of 2020, about 28.6 million Baby Boomers — those born between 1946 and 1964 — reported that they were out of the labor force due to retirement, according to the Pew Research Center.
That equated to 3.2 million more Boomers than the 25.4 million who were retired in the same quarter of 2019. Until last year, the overall number of retired Boomers had been growing annually by about 2 million on average since 2011.
Notably, the job losses associated with the COVID recession may be contributing to the jump in Boomer retirements, the Pew Research Center reported. In other words, some have been forced into retirement.
As such, some older workers that are still employed may decide to delay their retirement, Saylor said.
Though stocks continue to perform well, lower bond yields caused by the pandemic might make it harder to make ends meet on a fixed income, he noted.
“Folks who are uncertain are going to work longer,” he said. “When your income is most likely going to be fixed, if you’re retired, and you’re going to have significant additional expenses that you can’t necessarily deal with — notably, medical expenses, which go up after we retire as we get older. And those sorts of things are outside of our control.”