Stock Market Losses Threaten Baby Boomer Retirements
It’s never a “good” time for the bear to growl down on Wall Street. But this one couldn’t have come at a more inopportune time, as far as Baby Boomers are concerned. From Reuters staff earlier today:
Wall Street is currently in its worst bear market since the Great Depression, and its stunning destruction of wealth and retirement savings has sent a wave of distress through investors, especially older ones…
The Organization for Economic Cooperation and Development estimates U.S. household wealth has taken a $7 trillion hit from the tumbling housing and stock markets.
Last week’s stock market losses took the S&P 500 down to 11-year lows and amounted to a 52 percent decline from record highs hit a year ago.
Source: American Chronicle
What makes this stock downturn so potentially devastating is that a sizeable portion of retirement assets belongs to older Americans. From the Reuters piece:
Households aged 50 and older held $5.1 trillion in retirement accounts as of Sept. 30, 2008, according to the Urban Institute. That means 71.5 percent of all retirement account assets are in the hands of those vulnerable to financial losses as they approach the end of their salary-earning years.
Of households ages 50 and older, 49 percent own retirement accounts, and nearly 80 percent of those accounts include stock holdings, according to the Urban Institute.
The typical retirement account for 50-and-older savers has half its assets in stocks, compounding the damage just as many enter the final stretch before retirement. This could also have a chilling effect on the economy if they are forced to adopt a more austere lifestyle to shore up savings.
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Source:
“Falling Stocks Crush Boomers’ Retirement Funds”
Reuters, November 28, 2008
November 29th, 2008 at 8:08 am
It is kind of dammed if you do and dammed if you don’t..So you start saving dollars and then the stores suffer..spend too much and you suffer. What are we supposed to do??? We want stores to stay in business but we want to stay in business.
November 30th, 2008 at 11:38 am
I guess I’m kinda/sorta lucky I never had the money in the first place to “invest” in this market Texas hold em game.
I started out at 79 bucks “a month before tax’s” at 17 with the Army. I managed to get by with CD’s and today need 3 banks to keep what I have safe from the FDIC limit.
So I owned a van for 18 years, bought a home that most people paid more for their SUV, and never bought crap on a CC unless I knew I could pay the damned bill when it came.
So yeah I was considered the cheap Charlie, the stupid one who didn’t know how to “invest” , and wasn’t given much on my future.
All the talking head guru’s on CNBC including the Suzie’s weren’t around to give me all this finical advice, I somehow figured it out myself even without a PhD in economics or an MBA.
and btw I start my social security this month too, smirks, what ever is left of it and how ever long it lasts.
Only thing that frosts my ass is that with all this bail out crap I guess maybe I was stupid not to go for that 5ooK house and 2 beamers with 100K on 5 credit cards in dept cause it looks like those are the ones that will make out.
November 30th, 2008 at 5:16 pm
Carol,
Does this mean you should go out and buy a new Cheverolet to keep GM solvent?
Saw a van pulled over by the side of the road near my home; the person was selling some beautiful handmade Christmas wreaths. Was tempted to buy one, but then again, I am being financially squeezed these days, just like everyone else.
Sorry to be blunt, but it is not my obligation to keep the wreath-maker in business, nor to keep any other business afloat. My obligation is to remain solvent by spending prudently in order to provide for my family.
That’s reality.
-Mammoth
December 2nd, 2008 at 9:08 am
Thanks for the comment Carol.
“It is kind of dammed if you do and dammed if you don’t.”
It certainly is. But, the existence of economic cycles creates situations where business conditions get tough and a number of businesses, especially those that depend on “good times,” go broke. Those businesses that sell products that are immune to or are even desirable in a downturn, or have positioned themselves wisely for a turn in the cycle, survive. Financial Darwinism, so to speak.
December 2nd, 2008 at 9:20 am
Thanks for the comment HOODY.
“Only thing that frosts my ass is that with all this bail out crap I guess maybe I was stupid not to go for that 5ooK house and 2 beamers with 100K on 5 credit cards in dept cause it looks like those are the ones that will make out.”
Irks me too. What kind of future does this country have when the government turns its back on hard-working, responsible citizens? Not a bright one, I would think.
December 2nd, 2008 at 9:29 am
Thanks for the comment Mammoth.
“Sorry to be blunt, but it is not my obligation to keep the wreath-maker in business, nor to keep any other business afloat. My obligation is to remain solvent by spending prudently in order to provide for my family.”
If you don’t take care of your family, who will? The government? They’re broke.
December 21st, 2008 at 7:02 am
well we can take comfort in the fact that the guys like stan o’neal and other merrill lynch execs still have 100s of millions in the bank, while we eat dogfood
December 21st, 2008 at 8:15 am
Thanks for the comment peter.