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Patience Over Panic

Apr 20, 2020
Empower Insights

How one family is managing their finances amid the global pandemic

As the delivery truck full of new furniture pulled up to his driveway, Dan Lah felt just a slight sense of regret.1

If only for a second.

Six weeks earlier, when business was business as usual for many Americans, Lah and his wife had saved up enough money to fully finish and furnish their basement. It came with a $10,000 price tag, but they were sure the in-home theater system and downstairs sports bar would be worth every penny.

“The timing wasn’t great,” says Lah, who resides in Indiana. “It is what it is.”

Of course, the couple had already paid for the renovation before the coronavirus outbreak.

Before the global pandemic.

Before the stock market plummeted.

Before social distancing.

Before Lah estimated he may lose 20% of his expected income.

“I’m not kicking myself quite yet,” says Lah, an IT sales consultant who relies on commission for nearly a quarter of his annual pay. “But this is probably the last big-ticket purchase we’ll make for a while.”

Lah isn’t alone, either.

According to an online survey conducted by the Harris Poll on behalf of Empower Retirement in March 2020, 82% of adults in the U.S. are “worried about the long-term impact of a possible recession.” In fact, within that same group of people, 74% remain concerned about economic volatility while more than half state they will also cut spending on nonessential items during the COVID-19 crisis.2

82% of adults in the USA are worried about long-term impact of possible recession

 

“I still have a positive outlook for the future,” says Lah, 39. “But what’s happening in our country isn’t sustainable.”

With two young children, the financial outlook for Lah is still taking shape.

Like many companies in the U.S., Lah’s employer mandated an indefinite work-from-home policy in the middle of March. Along with the extensive travel restrictions in place, many of his external partners have canceled appointments and delayed potential deals. When it’s all said and done, those missed opportunities will likely result in less income from a commission standpoint.

“There’s a lull in activity,” Lah says. “Initially, I thought this would just be a blip on the radar.”

In Lah’s profession, he devotes a significant portion of his time to being out in the field, presenting solutions on-site in front of potential clients and discussing their specific needs in face-to-face discussions. If customers are happy and demand is high, he could hold up to five meetings per week.

Now his schedule is down to one or two, all via virtual technology.

“It’s not as efficient,” says Lah, who depends on white-boarding as a tool “to draw out” what a customer envisions. “It’s nice to be out visiting with people and not having to sit in front of a computer all day.”

But just like he’s had to adapt in his career during this unprecedented period, Lah is also trying adapt to the unstable economy — by mostly staying the course when it comes to his investing strategy.

Patience usually pays off, he believes.

“Every time things like this happen, there’s always cases of people panicking,” says Lah, a self-described conservative investor who sticks with mostly low-cost index funds and actively managed funds. “I don’t think I’ll sell unless something catastrophic happens to our savings situation.”

As the data shows, many Americans fall into a similar camp as only 15% have shifted their portfolio to less risky investments.*

Currently, Lah and his wife, a pediatrician, are both contributing the maximum amount to their 401(k) accounts. In addition to his wife’s 457 plan, which is offered through her practice, and two separate IRAs, Lah guesses the couple sets aside 30% of their combined household salary for retirement.

Even in an uncertain market, those commitments will remain the same because Lah agrees “the downside is minimal.”

Instead, Lah and has focused more on finding other ways to save without having to sacrifice his goal of retiring at age 50. For starters, even in the wake of a statewide stay-at-home order to help slow the spread of coronavirus, the family won’t be ordering takeout food that often — and they don’t intend to make any additional upgrades to their house.

On top that, after speaking with their financial advisor, they were able conserve cash by not putting as much excess money toward emergency funds. They were also able to refinance their 15-year mortgage at a fixed rate of 2.62% as they were committed to maintaining their current lifestyle.

To Lah, with his income up in the air in 2020, every bit helps.

“We were pretty smart with managing our expenses in the first place,” Lah says. “Our patterns haven’t changed.”

And neither has Lah’s dream of retiring early.

“I want to do something that’s rewarding on a personal level, like volunteer or get involved with a charity,” Lah says, referring to his plans for retirement. “I won’t just be watching TV all day. I’ll find a fulfilling way to keep myself busy.”

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1Empower Retirement interview with Dan Lah, March 2020.

Testimonials may not be representative of the experience of other individuals and are not a guarantee of future performance or success.

2 Empower Institute, From Confidence to Concern: America’s Financial Outlook in the Face of a Pandemic

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