Money Experts on Recession Survival
Jean Chatzky, 44, is More‘s financial columnist. Her latest book is The Difference.
Diane Swonk, 46, chief economist for Mesirow Financial, wrote The Passionate Economist: Finding the Power and Humanity Behind the Numbers.
MORE: The dollar’s plunging; markets are wild. Interest rates keep dropping. Let’s talk about how this will affect women over 40, specifically. What should we do?
CHATZKY: Well, some of the answer is what we should not do. The suggestion that people just go out and spend their tax rebates shopping — to bolster the economy — makes me want to scream. Consumers have been propping up the economy for a long time, and it’s not our job! Certainly not when we’re parents or have older parents to care for. At a time like this, you need to focus on what’s good for you.
SWONK: Another thing not to do: sell stocks. In this kind of financial market you should stay put. If you have money, don’t be afraid to buy. Sell high, buy low is the classic advice, but most people don’t listen to it. Women are better than men at this — at not following the crowd. A little estrogen helps. I know this will seem a bit sexist, but come on, we…
CHATZKY: Well, we’re the planners.
SWONK: We are the planners. Midlife women know how to take the long view. By the time you’re in your 40s, you’ve probably buried a parent, had a major loss: I had a son who almost died; I’ve gone through two divorces, two strokes. We know we can weather a storm and come out standing — with a sense of humor. It’s hard to scare us. That’s a real advantage now.
CHATZKY: Right. Don’t get caught up in the feeling that you have to be a winner, have to beat the markets. And don’t let the news drive you; this is the time to turn off the television. This may sound basic, but look at me: I’ve written columns on this. Yet when the markets get shaky, it still worries me. Take a deep breath. Then put your sneakers on and go out for a run instead.
SWONK: It’s funny you mention running, Jean. I’m a major runner: That’s how I collect my thoughts. I have a place by Lake Michigan, which some people forget is this big, ocean-like body of water. One of the major killers on the lake is the riptide. I was running there recently, and I saw a big sign about what to do if you’re caught in a riptide. It said "Remain calm. Swim with the current, parallel to the shoreline, until you are safely away from the tide. Then swim to shore.’‘ That really couldn’t be a more perfect message in this market.
MORE: Do midlife women have more cause for worry during a recession than younger women?
CHATZKY: We do have different needs. We live longer than our spouses, and we still earn less than men in this country. So at the end of the road, we have less money, and we need more of it. I just saw another piece of research saying that women have to put even more money aside to cover healthcare in retirement. Women over 40 who haven’t made an effort to put money away have work to do.
SWONK: I want to underscore that. And this is especially true for women over 40 who’ve been out of the labor force caring for children. In a recession, their chances of getting back into the labor force and catching up are significantly diminished.
CHATZKY: If you do have a job, this is the time to give more to employers than you ask them for: Be a team player. Again, midlife women are good at this.
MORE: What else can we do to protect ourselves — or even come out ahead?
CHATZKY: When interest rates dipped pretty low last time, some people took the opportunity to reshape their personal balance sheets, to refinance and build equity. Others took on more debt, spent more than they were earning, and didn’t put anything away for retirement or for college for the kids. They’re really feeling the pain right now.