Simply Money: Planned to retire soon? What to do now

Question: Matt from Florence: I was planning on retiring early next year. But now with all these market losses, I’m not sure if I can. Any suggestions? 

Answer:Right now, our best suggestion is to stay flexible.As we discussed in last week’s article, the stock market is resilient – it could perhaps recover by next year. But, if it doesn’t, you may have to consider working a little bit longer than you originally planned. Is that something you’re mentally prepared to do? Also, double check that your asset allocation (which is your mix of stocks and bonds) and your risk tolerance are appropriate for you and your retirement goals.

We also always recommend that retirees have a “cash cushion” set aside for times just like these – that way, you can pull from these cash reserves and not tap your stocks (thereby locking-in losses). If you haven’t started building a fund like this, it’s a good idea to start now. 

With all that said, your retirement date is not the financial target… providing sufficient cash flow (and not running out of money) in retirement is the actual goal. If you lay the groundwork with a well-balanced portfolio, sufficient emergency cash reserves, and zero debt at retirement, there really is no reason to change retirement unless you feel you need to for peace of mind. Remember, you’re really investing for the 30 or 40 years you could potentially live in retirement, so short-term events like stock market selloffs should not matter in the long run (even though they feel scary in the moment).

Q: J.L. in Hamilton: I’m confused about Ohio’s unemployment filing rules due to coronavirus. Even though I don’t have symptoms, I have decided to self-quarantine for my safety and everyone around me. But this means I can’t work. Can I still apply for unemployment? 

A: We understand how frustrating it can get when things are moving so swiftly – it can be hard to keep up. Let’s share what the Ohio Department of Job and Family Services’ website says (at the time of this writing) in regard to a situation like yours: “Unemployment benefits are available to individuals who are totally or partially unemployed due to no fault of their own.” Simply, ifyouare choosing to stay home – your employer isn’t forcing you to – then you would not be eligible. However, more factors could be at play as well. If your employer requires you to stay home and does not offer telecommuting, then you may be eligible, assuming you meet the monetary and weekly eligibility criteria. But if you’re able to telecommute to fulfill your job duties, you would not be eligible. 

The Simply Money Point is that we know things are confusing right now. And rules are changing daily. Our best suggestion is to visit this site for an updated list of FAQs:http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm

Q:Kathy in Milford: I’ve seen some companies are benefiting from this outbreak, like Clorox and Zoom Video. Does it make sense to buy stock in them right now?

A: Even during a pandemic, our answer to a question like this remains the same: We do not recommend investing in individual stocks. Why? Because using this investing approach means you’re taking on more risk since you’ll likely lack diversification. Additionally, if you own a lot of individual stocks, that just means you’ll have to dedicate more of your time to research. And it can be really hard to keep your emotions in check – we’ve seen people become obsessed with the minute-by-minute price changes of a single stock. Plus, don’t forget, you can’t predict the future. While some companies may be doing well right now, the tide can always turn. 

We will say, however, that this rule of “no individual stocks” can be hard to follow given that many people around the Tri-State may hold shares of local companies. So, we’ll grant you some wiggle room: If you’re going to own individual stocks, be sure their total value makes up less than 10 percent of your overall portfolio.

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