"Do what you love," they said. "Find work that you enjoy."
Now, finally, they tell us that this is because we are going to work into our late 80s.
10 years ago, about 80% of retirement plans were pension plans. If you work for 30 years and you are 60 years old, you'll get, say, 90% of your salary until you die.
Today, about 80% of retirement plans are 401(k), or IRAs. If you save for 30 years and you are 60 years old, you could be rich or you could be a pauper - no one knows. And the money you've saved might be enough to finance your retirement and your children's retirement - or might scarcely be enough to finance your grocery store habit through the end of next month.
This market crash is coming at a terrible time for the baby boomers who have just begun turning 60. To have the market drop by 30 to 40% just years before you were going to retire is terrible. No one has talked about the fact that their retirements have just been delayed by years. By the time the dust settles on this year, they may be the group that pays the biggest personal price.
9 comments:
Ron, you are absolutely right, and as I watched all the blowhard politicians who are more interested in pointing fingers than finding a solution, I say, "it's time to throw the bums out".
I never imagined that I would watch a market collapse. Today, I began to get fearful of where this would end.
The other issue that comes up with people working longer, is that they take jobs that were previously opening up to college grads. And since the economy would be bad enough for them to continue working, this means companies will not be able to take on more employees, it's a vicious circle.
Yesterday we looked at our retirement savings plan. There had been a substantial drop in its worth. It is difficult to see money that has been earned through years of hard work just disappear. I wished fervently that we could have made the last 8 years with Bush disappear just as easily.
I feel your pain Ron-O. Not being entirely anti-Keynesian, circa late 2006, Bush, McCain and others (Obama claims now to have been one of them) warned of the impending mortgage mess and called for some regulation or oversight and NO ONE acted.
Being a coward, I sold my home in NV, pulled my money out of my IRAs and 401Ks and took out insurance annuities (questionable call), bought many FDIC insured CDs and gold too. I was almost embarrassed to tell anyone I was giving up so much appreciation. I could do it because I didn't need the money or the interest or dividends as disposable income. Thanks in part to you for causing me to learn more about economics, I heeded the warnings and acted however imperfectly.
I don't have a ton of money but it didn't go down 30% recently. It could still all go t-up and we do need the controls but we did then too and look who didn't support that. Perhaps Bush would have caved in to the neocons but lots of republicans and democrats were lobbied in another direction. I know their names.
Complex world. Doesn't cut it to blame one person or one party anymore. As we saw yesterday, and will see beginning with President Obama hopefully, there's no guarantee one man or one party will do the right thing. We can hope though.
It is terrifying. Even at my age, years from retirement. You cannot wonder why some people don't bother saving, since it is absolutely no guarantee of being taken care of.
Suzanne,
I've seen estimates of about a half the value of equities and bonds being written off. This is like the pension fund equivalent of "return to go."
Eric,
It's true. Things get their own dynamic - which is one reason why it is important to intervene now.
Milena,
it is outrageous to see so many years of savings disappear. I would so much rather have spent it on a cars, trips, and electronics.
David,
Good move. Now is the time to buy banks and mortgages - I hear that they are selling at a discount. President Obama? Does this mean that he's won you over?
Emily,
yes, consumption does seem more certain to work than savings right now. Ridiculous.
Ron-O,
He hasn't won me over as much as the other guy has disappointed me. He could have looked Barry in the eye and said many things he failed to say as I don't believe he was prepared. Not a good sign. I don't think he thinks he can win and it's becoming apparent.
Addendum: Yesterday I actually went back into the market and bought a few shares in some companies that I've wanted to own, and which now look priced right.
It will be interesting to see if we've found support at 8000 or whether we will continue to drop to 7000. And if so, whether we will continue to bounce along in that trough for a while (year) or have a quicker recovery.
Ron, I cannot imagine you ever wanting to retire so it is interesting you focus on this issue. It is obviously no secret that people were going to have to work longer than the classic retirement age no matter what has happened with the stock market. As for older folks "taking" jobs from younger folks this is a fallacy based on zero sum economic thinking. Having productive workers, young or old, is a good thing.
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