Anderson: Pandemic has taught us lessons in finance – The Columbian

First among them: Everyone needs a will



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COVID-19 shut down the world. Businesses closed. International travel collapsed. People lost jobs. Kids were out of school.

We huddled at home washing our fresh produce, making face masks. The pandemic took us to a place that felt new and scary.

In March 2020, American stock markets sold off, dropping in value within days by 30 percent. People got sick and went to the hospital, where courageous health care workers saved many. Still, the virus killed almost 1 million Americans.

We have learned a lot in the past two years about viruses, vaccines, social distancing and working from home. Some lessons we already knew but had to learn again — the hard way.

Lesson 1

We all need wills and health care directives.

Bankers, estate attorneys and the financial industry have preached this for years. When COVID-19 began hospitalizing people, health care directives and a will became paramount.

A will designates beneficiaries of your assets — your house, car, 401(k) retirement account, savings account. It names an executor to “settle” your will by shepherding it through a court. A will names those who would take care of your children if you and your spouse were gone.

Along with a will, health care directives list people who legally can make health care decisions for you if you can’t.

For example, if you have lived with someone for years but never married, health care directives legally allow your partner to talk with doctors, share your medical history and make medical-related decisions on your behalf.

Basic templates for state-specific wills and directives are available for free online. Fill them out, get them legally witnessed and notarized at a bank or other financial office, or have a notary come to you. An attorney will write a basic will for you for about $300. The cost goes up as the instructions become more complex.

Sadly, only five out of 10 Americans have a will. This is a long-term but urgent item on your to-do list if you don’t have a will and health care directives. Give copies of these documents to your family.

Lesson 2

Confident investors don’t panic.

When markets cratered in March 2020, it felt terrible. Fear was in the air as we hunkered down, buttoned up, and began hoarding toilet paper and hand sanitizer.

Many savers moved out of stocks and into cash at or near the bottom of the sell-off because things looked bad. But those who sold in the 2020 panic then faced a tough decision: When to get back in? Many did not.

What happened next? The 2020 bear market selloff was short-lived. The recovery came quickly as the federal government cranked up the money-printing press, rescuing the economy.

While “all bear markets are inherently different, the common thread is that they always end,” said Peter Lazaroff in a recent Wall Street Journal report. “Investors must be willing to lose money on occasion — sometimes a lot of money — to earn the average long-term return that attracts most people to stocks in the first place. … If you can be a buyer in times of fear, your chances of earning above average returns improve.”

By the end of 2020, stocks were up 16.26 percent over 2019. That’s above the annual average return of around 7 percent to 10 percent over the past 70 years.


Women took a bigger hit than men from the pandemic. They lost more jobs, they stayed home with kids, they closed small businesses, they stopped saving. Now, they need to catch up.

But studies show that women can be more easily scared out of stock markets and are more conservative with their savings. Women, more than men, put money into lower-earning money market accounts. They often are less confident investors. They hate seeing the value of their retirement savings decline, so they sell at the wrong time.

But according to Jeff Mills, chief investment officer at Byrn Mawr College, “A diversified portfolio that you can stick with regardless of the market environment should be the cornerstone of everyone’s investment strategy.”

Investors learned yet again that nothing stays bad forever. What might feel new and scary is really a variation on what we’ve seen before. Disciplined investors hang in there by weathering the drops and benefitting from recoveries. (The crisis in Ukraine is causing similar worries.)

Lesson 3

An emergency fund is a great idea.

A survey of investment managers by the Wall Street Journal ranked putting cash into an emergency fund as their top-priority money-management tip. An emergency fund means that the blow of an unexpected layoff or accident can be managed. Emergency money will save you from turning to expensive credit card debt. You have money to cover basic household bills until unemployment checks kick in, until you have a plan. This fund should cover at least six months of household expenses. Every money guru will tell you this.

Lesson 4

Stay flexible with retirement planning.

According to Maddy Dychtwald, co-founder of Age Wave magazine, an estimated 81 million Americans saw their retirement timing affected by the pandemic. On average, baby boomers are putting off retirement by three years.

Working longer into your 60s is not a terrible thing. It gives you more time to recover financially, more time to save inside a tax-deferred retirement account, more time to put off claiming Social Security benefits.

Start early — in your 40s and early 50s — putting together a flexible retirement plan by paying down debt and saving more.

Looking ahead

Focus on recovering financially from the pandemic by taking these steps:

  • Get a better-paying job.
  • Set up and add to a cash emergency fund.
  • Invest in stocks and stock funds inside a tax-deferred retirement account. Use your employer’s 401(k) retirement program and/or an Individual Retirement Account or Roth IRA. This is the only way to beat inflation that erodes savings.
  • Develop a long-term plan to pay down debt and build funds to get you to retirement.
  • Don’t panic sell. Stick with your plan.
  • And no matter your age, put together a will and health care directives. Your family will thank you

Julia Anderson, a former Columbian business news editor and financial columnist, is the author of “Smart Women Smart Money Smart Life” (Amazon, $11.99). She hosts “Smart Money” on public television in Beaverton, Ore., and on YouTube and writes a personal finance blog for women at