What Does Financial Independence Have to Do With Surviving a Pandemic?

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The world faces the most serious crisis in most of our lifetimes, and people are dying. What does this blog’s theme of frugality, investing, and financial independence have to do with a pandemic? Are we being frivolous, uncaring, or irresponsible to focus on money while thousands of people are losing their lives in a health crisis?

Salt CreekWe all have some civic responsibilities right now to take care of our society and neighbors. Stay at home as much as possible. Practice social distancing and wear a mask when we go out. Self-quarantine if we have symptoms. And donate generously as much as we are able to the social safety net that so many will need.

Beyond those measures, we need to go on living our lives and contributing through our work as best we can. Chris and I have dedicated much of our early retirements to exploring the techniques for and benefits of reaching financial independence. And a little reflection makes clear that those techniques and benefits are highly relevant to surviving a pandemic, or any crisis, for that matter.

In fact, being prepared for financial and other crises was one of my underlying motivations in pursuing financial independence. I explored these topics in depth in my articles on black swan events, and financial risks that I wrote years ago.

A frugal lifestyle prepares you to live comfortably with less if necessary. And it produces a surplus of resources that you can invest or use to sustain life. The ability to live frugally is usually a necessary ingredient for retiring early, and is always an asset in hard times.

Financial independence means you have enough assets to sustain yourself without working, if necessary. The benefits are significant in a crisis: you can shelter anywhere and provide for yourself without having to fight for resources. You have the time and energy available to look ahead, prepare, and stay safe. The benefits to your physical and mental health are huge.

Yet, regardless of our financial means, it would be foolish to believe that we can go it entirely alone or that any of these benefits are guaranteed. We are still dependent on others to produce the food we need to eat, on the health care system to treat us if needed, on the government to maintain order. None of that is a given.

But I’d much rather be facing these issues from a position of financial independence than not….

Warning Signs

It was mid-January when I began reading the reports from China. The residents of Wuhan were struggling to control a new virus. And it was killing a measurable percent of patients.

In interviews, infectious disease experts all said the same thing: it’s virtually impossible to stop a highly contagious respiratory disease. It would “spread with the wind.”

As the disease leaked out of China, the writing was on the wall….

In late January I began making modest preparations. Having overprepared for Y2K and other crises of the past, I didn’t go overboard. Nor did I bend the ear of family and friends I knew would be skeptical.

In late-February, I consolidated my plans for a winter road trip and left for three-weeks to conduct some family business, and, in between, camp in the great national parks of the desert southwest.

As the sun set over my peaceful campsite in Death Valley, I reminded myself to appreciate every moment, because it could be a very long time before I would have such freedom again.

One morning a few days later, I was in an auto parts store in a dusty California desert town. I overheard two employees talking and laughing among themselves. It seems some “nut” had just come in and bought up all the hand sanitizer they had in stock.

The panic buying had begun.

Even I underestimated the speed with which the virus would spread. When I left for my trip, there were no known cases in the general U.S. population. By the time I returned, three weeks later, there were thousands of cases in this country, and statewide shelter-at-home orders were coming down daily.


As I’ve said, being financially independent has major advantages right now. Still, I feel like I’ve barely looked up from attending to ourselves and immediate family since I returned from my travels. I feel for the many out there who are struggling to work, or pay bills without working, or care for sick family members.

Since our state’s shelter-at-home order came down several weeks ago, we have not been out of the house other than for exercise. Amazon and instacart have provided groceries and other essentials. Both have been doing a magnificent job in the face of extreme pressure.

Whatever reservations I had about Amazon’s business model and its impact on smaller businesses, are now tempered by the company’s heroic performance in this crisis. (Add to the list of my heroes — mail carriers, delivery drivers, garbage collectors, doctors, and nurses.)

Like many of you, I’ve been reaching out to family and friends on a regular basis with phone calls, Skype, and Zoom. These digital technologies are now more essential than ever and can help alleviate, though not eliminate, loneliness and isolation.

My exercise routine has continued unchanged. During last summer’s injury I bought a small, highly-reviewed rowing machine on Amazon. It lets me get a well-rounded, low-impact, full-body workout in the privacy of my own office. And it folds up in a corner of the closet when not in use.

I continue to hike or bike outdoors several times/week, leveraging my knowledge of local trails to minimize contact with others. Losing that outlet would be hard for me, but I’m continuing to evaluate it based on local closures and conditions.


Readers, family, and friends have reached out to get my thoughts on investing right now. It’s natural to want some secret sauce, some imaginary asset class that is completely safe in a downturn, yet grows steadily in good times.

But here is the truth from somebody who has encountered three serious downturns over 20 years now: The only secret sauce is diversification.

If you want to preserve capital, then spread your assets around and never sell one when they’re down. Don’t pile into a single asset class thinking it provides safety, because you run the risk of being blindsided by circumstances you didn’t imagine.

Yes, cash is always king in a recession. You want to avoid debt and have plenty of liquidity for feeding yourself and taking advantage of buying opportunities.

But cash isn’t all that you want. Selling all your investments and going completely to cash is an amateur move, in my opinion. How will you know when to get back into the market? A few will get lucky, but, for most, it’s a loser’s game.

And there are other risks to being entirely in cash. On top of an already-large deficit, the government is pumping trillions into a stagnant economy, with more dollars likely. Interest rates are at rock bottom. Easy money and not enough goods. That doesn’t sound like a formula for fiscal stability to me. If the government doesn’t manage the stimulus well, severe inflation is just one way this scenario could end.

Here is my approach:

In early January, before the Coronavirus was on my radar, I wrote in in my annual portfolio post:

“If you’re a seasoned investor, you know not to construct an investing strategy based on one year of double-digit returns. If you’re a retiree living off assets, caution is always advised. I’ve been in a defensive posture for years. Most of my investing life I’ve held a roughly 50/50 stock/bond asset allocation. Now I have even less in stocks. I may be wrong, but my concern is that the good news is closer to ending than beginning.”

At the time, my portfolio was allocated 43% in stocks, 34% in bonds, 6% in gold and digital currencies, and 16% in cash.

While on my road trip as the crisis heated up, I ignored my portfolio — one benefit of a conservative allocation.

After returning home, digging out, and finally looking at my numbers, I made a couple of moves: Between rebalancing in my retirement account and an IRA contribution, I reallocated about 3% of our investment assets from cash and bonds to now cheaper stocks. Currently, those new purchases are in the money. But I fully accept that the market could have much further to fall.

That leaves our asset allocation as I write this at 44% stocks, 36% bonds, 8% gold and digital currencies, and 13% cash. I’m comfortable with that allocation and don’t anticipate making any changes for a while.

(Please understand that I’m not advocating my particular portfolio for anybody else. I am simply documenting what I own, so you can draw your own conclusions and lessons. Also, I am not a financial advisor and cannot give personal financial advice or discuss investments that I’m not familiar with.)

Prepare for the Worst

I suspect our world will be fundamentally changed by this virus. We’ve been living beyond our means and now the bills are starting to come due.

Travel isn’t as cheap as we thought. Jetting to the opposite side of the globe for a vacation has environmental impacts and health risks. Now the real costs are becoming clear: Three months after a deadly pathogen jumped to a human being in a Chinese market, that same microbe is circulating in small towns on the other side of the world.

We are in uncharted financial as well as public health terrain. The rate of unemployment claims is several multiples of anything that’s ever been seen before. Some economists are expecting 20% or higher unemployment by summer.

That is Great Depression-size upheaval in the modern era. How will our entitled and dependent society react? Nobody should ignore the potential for suffering and social strife ahead.

Entire sectors of our economy are looking at long declines. Why would large numbers of strangers dine out in the same room together, until a vaccine is developed, possibly years from now?

Weak businesses, like malls and department stores, may die off entirely. Restaurants, hotels, airlines, entertainment, public venues of all kinds, could be downsized or eliminated.

Scores of service sector jobs may go away, to be replaced by what?

In the years after the Great Depression Americans increased their savings rate and reduced their reliance on borrowing. Nothing wrong with that. (Unless you’re an economist.) But we need to figure out a world economy that is not so dependent on growth and consumption.

Meanwhile, those of us with assets had better be prepared to see some of those assets go to keeping our neighbors afloat.

Hope for the Best

A good friend in Tucson says the skies have never been clearer in his 10 years there. The planet is getting a much needed rest from human activity.

But our economy didn’t suddenly become incapable of producing at its old levels. Rather we have voluntarily throttled it to save lives. Yes, if we aren’t careful, we are going to damage it permanently. But we aren’t yet at that point. What we do in the next months will be critical.

We are the wealthiest human society ever to experience a pandemic. We have technology and tools and resources that our ancestors couldn’t have imagined. Food is still relatively plentiful. I can still log onto my computer, click a few choices, and have a bag of fresh groceries or a box of critical supplies show up at my front door in a few days. Many of us can work at home while collaborating with others using sophisticated communication tools.

It is well within our means to cope with this threat, minimize deaths, salvage the economy, and come out the other side with a wiser and safer society, better prepared for the next, possibly more lethal, pandemic.

Will we?

The answers depend on our leaders and on our own individual actions. Even an extreme introvert like me cannot deny our interdependence. Ultimately we will thrive or suffer, together.

My grandparents were middle-aged during World War II. My mother’s side fought in the war; my father’s side was involved in heavy industry that supported the effort. I can still remember their stories of hardship, rationing, blackouts, and the celebration and joy when it was finally all over.

We too can reach that joyful day. There are brighter times ahead, and most of us can make it there, humbler, wiser, and better prepared.

(NOTE: comments are turned off for this post due to limited time and energy for dealing with a few bad actors.)

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[The founder of CanIRetireYet.com, Darrow Kirkpatrick relied on a modest lifestyle, high savings rate, and simple passive index investing to retire at age 50 from a career as a civil and software engineer. He has been quoted or published in The Wall Street Journal, MarketWatch, Kiplinger, The Huffington Post, Consumer Reports, and Money Magazine among others. His books include Retiring Sooner: How to Accelerate Your Financial Independence and Can I Retire Yet? How to Make the Biggest Financial Decision of the Rest of Your Life.]

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