For most of us, April has traditionally been the month of taxes, spring holidays, and that old nursery rhyme about April showers. It is often seen as the month of rejuvenation. Perhaps less known is another significant event that occurs every year at this time — Financial Literacy Month.
The month set aside to teach Americans how to establish and maintain healthy financial habits is not new — it actually started in 2004 — but in the wake of the unfolding story of the economic ramifications of the COVID-19 pandemic, its goal of making us all more informed stewards of our personal finances has added urgency.
This is a time of heightened economic uncertainty for us all. Businesses around the country are shuttering their doors, responding to urgent calls to “shelter at home” to help prevent the spread of the unseen foe. The stock market has taken volatility to new levels, careening wildly from record highs to record lows including the biggest one-day drop since the Black Monday crash of 1987 and the largest weekly rise since 1938 during the Great Depression. Congress even took the unprecedented step of passing the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which is the largest emergency aid package in U.S. history and aims to provide relief for individuals and businesses that have been impacted as a result of COVID-19.
What Your Peers Are Reading
For Americans who have recently retired or are on the cusp of retirement, this extreme market volatility will likely have outsized ramifications for their retirement portfolios — and the lives they can live in retirement. For many, this will mean making tough choices about the long-held plans they made before the pandemic occurred and what they can now realistically afford.
A recent Barron’s article about how Americans were coping with the current crisis illustrated this. Among those featured were a 63-year-old former auto executive who was considering returning to work so he could maintain his current lifestyle. Another was a 74-year-old retired judge and semi-retired corporate attorney who moved all his investments into cash, which he said relieved him, but he wished he had done sooner. Both were facing less-than-ideal circumstances, but they identified practical options for addressing them based on their unique situations and their own financial literacy.
At uncertain times like these, one of the greatest stressors is always the unknown — and that’s as true for what we don’t know about our financial foundation as it is for anything else. The two retirees described above demonstrate why Financial Literacy Month is so important — because knowing what you have, how you can best manage it, and what type of future you can plan inspires confidence and creates a pathway to certainty.