Money is always stressful, but between on-again, off-again, on-again tariffs, inflation, and a general sense of uncertainty, all things finance have been especially anxiety-inducing lately.
Much of the advice given is geared toward people who have time to make up losses in the stock market. But what if you’re retired or close to retirement age? That’s the matter at hand on this week’s episode of Explain It to Me, Vox’s call-in podcast where we answer the questions that matter to you most.
Washington Post personal finance columnist Michelle Singletary knows that worry firsthand. She’s on the edge baby boomer and Gen X and is looking ahead to when she’s no longer working. “Like many people, I’m stressed to the max,” she says. “So I am punching a lot of pillows and crying and screaming and doing a little cussing, but trying to not let the fear dictate moves. And that’s the key.”
What other advice does she have for people looking to retire soon? And how should those of us who have more time talk with our older loved ones about their retirement plans? Below is an excerpt of our conversation, edited for length and clarity. You can listen to the full episode on Apple Podcasts, Spotify, or wherever you get podcasts. If you’d like to submit a question, send an email to askvox@vox.com or call 1-800-618-8545.
What should people who are approaching retirement age be doing right now in this economic moment?
You want to do a retirement budget. Figure out what it would take if you retired to live in retirement. And if you have a shortfall, then there are some things that you need to do.
Try to boost your savings. Try to look at your housing situation. Can I cut housing? Can I have a roommate? Do I need to move someplace that is more affordable? So you have to do some forward thinking before you retire to make sure that your finances are as secure as possible.
I have to admit something: I was particularly interested in this episode because my parents are boomers. What advice do you have for listeners that are like me?
It’s understandable that you’re concerned about your parents because if they’re not prepared, then that burden may fall on you. I say burden, not in a sense of you don’t want to do it, but certainly when you are in your 30s, 40s, and early 50s, you’re trying to get ready for your own retirement.
But I think this is a good opportunity to have open conversations. This is a window to say, “Hey, How are you positioned? Are you worried? Is there anything I should be concerned about? Is there something I can do differently to help you?” And maybe that’ll open up a conversation where they say, “No, we’re fine. We’re really worried, but we got things in control. Here’s what’s happening.”
It’s a very difficult conversation to have, especially if you’ve grown up in a household where money wasn’t talked about a lot. For a younger adult to try to come to their parents and say, “Hey, you got any money? What’s going on?” — that’s a hard conversation. But the roles aren’t reversed. You are not their parents. You are now an adult friend who happens to be their child.
How do you recommend that listeners start that conversation with the retirement-age folks in their lives?
Start with yourself and your own feelings. Say, “I’d love to talk to you about this because I’m a little worried. I’m saving for retirement and this is what’s concerning me.” And then you say, “How about you?” What you don’t want to do is say something like, “Do you have any money? What’s going on?” You don’t want to come at them in a more adversarial way. You should see each other as companions and accountability partners.
What should people prioritize when they look at their finances right now?
In this moment, cash is king. If you got a tax refund, I would be saving that. If you were already just getting by — maybe you weren’t living paycheck to paycheck but there wasn’t much left over — I would be stockpiling cash in a high-yield savings account in case you lose your job, in case the economy really does go into a recession, if it gets worse than it is now.
The prudent thing right now is to not get into any kind of debt or use a lot of cash that you might need if you lose your job.
If I was a federal employee, a federal contractor, anybody whose income is derived from the federal government in a significant way, I would be canceling vacations. I would not be doing major home improvement projects. I don’t want to make people panic — although it’s perfectly fine if you’re scared because that’s just human nature. But I will say the prudent thing right now is to not get into any kind of debt or use a lot of cash that you might need if you lose your job.
What are the different ways people can help their parents financially without getting behind on their own goals?
Do your own budget, and make sure that you have a cash cushion for yourself. Make sure that you are saving in a way that will hopefully help you have a secure retirement. Get rid of all your debts: If you got credit card debt, student loan, car note — everything except for your mortgage. Then, if all of that is taken care of, if you want to create an account where you put some money in every month to say, “This is the money that I’m gonna designate to help my parents or maybe another relative.” My husband and I do that. We have a family and friends fund so that if somebody loses their job or has some difficulty, this is where we pull the money to help them out.
What advice do you have for people who are at retirement age but haven’t been able to save as much? How do they prepare for this moment?
The first thing I would say is don’t beat yourself up. You are where you are. Accept that, but do something about it. If you are getting close to retirement, then you’ve got to make some hard decisions. Look at your housing situation. You might have to say, “You know what? Those young adults that were asking me about my money? Maybe I have to move in with them or they move in with me.” And so you look at the big parts of your budget and how you might change that.
Financial advice can admittedly be a little frustrating because we hear the same thing over and over again. “Sit tight, stay the course, don’t make any rash decisions.” What do you say to people who feel antsy right now? Who want a different answer than what they usually hear?
Listen, good advice is good advice, no matter what. Good advice is timeless. And people want a microwave answer to a problem that needs to be baked in the oven. You can’t microwave your way away from this situation. You just can’t.
There is no secret recipe or secret anything. We know by history. The market eventually returns historically. Could it change in the future? Sure it can. But we have decades and decades of data that show that when we go into an economic downturn, we come out because it’s in everybody’s interest to make sure that happens. And so while you may be tired of us saying, “Hold tight,” you might be tired of us saying, “Don’t make rash decisions,” that is the best advice. We know that when you make decisions in haste, when you make decisions based on your emotions, you make bad decisions.
I will not tell you not to panic when the market goes down. I will not tell you that because it is human to be mad and angry and upset and scared. Be all of those. Just don’t make decisions in that moment.
