Market chaos causes worries
NEW YORK – Suddenly, those plans for early retirement seem unwise, and eating in sounds better than dining out. For many Americans over 50, stock market worries are taking a toll on outlooks and lifestyles.
”I’d like to retire tomorrow but I put my money in a 401(k) and mutual funds and now it’s going to take another 10 years,” said Sylvia Steimke, 54, who works for an escrow company in Glendale, Calif.
”I took a chance and the timing was bad. I hate to paint such a bleak picture but I don’t have high hopes about retirement.”
In the past two decades, close to 50 million Americans have invested more than $1.5 trillion in employer-sponsored retirement plans, most with exposure to the stock markets. The latest market gyrations are hurting those planning retirement and those already retired.
At the Northbrook Senior Center outside Chicago, members of the investment club met last week to assess the damage.
”We’re talking about holding,” said club president Bob Koch. ”Nobody’s talking about panic.”
The club’s collective stake is modest – a balance of $50,000 spread among 18 members. But for Koch and his wife, on a personal level, the news from the markets is daunting.
A former manufacturing executive, Koch, 70, relies mostly on investments to fund his retirement.
”Right now, I’m just watching the pile go down,” he said. ”We don’t go to the movies as much, we don’t eat out as often. We’re curtailing a little bit on travel.”
Fellow retirees keep talking about possible part-time jobs, he said, and some retired teachers are working more often as substitutes.
”Life is changing,” Koch said. ”The terror is that it could become so widespread, if people cash in and lose a lot.”
Clare Hushbeck, an economist with the senior advocacy group AARP, agreed that dropping stocks are prompting more retirees to contemplate a return to work.
”The financial advisers who deal with older people are getting this question: ‘Help, what do I do? Can I live on this for four decades?”’ Hushbeck said.
The answer is ”no” for 66-year-old Diane Cusimano, of Borrego Springs, Calif., who visited a friend last week at a retirement community outside Las Vegas.
”It’s added years to my work,” she said of the market drop. ”Have to wait and see.”
The latest downturn is more worrisome to many older investors than the battering of high-tech stocks a year ago, according to Laurie Fleischman, vice president of marketing at Diversified Investment Advisers in Purchase, not far from New York City.
”Staying the course has become almost a cliche,” she said. ”This is probably the most dramatic test of that we’ve seen.”
Fleischman said her company continues to counsel patience, while advising clients to ensure their retirement accounts are well-balanced between stocks and more conservative investments.
Jim Thompson, a Scudder Investments executive who works with the AARP Investment Program, said many older investors are willing to ride out market dips.
”They watch their investments carefully, they are concerned, but it doesn’t lead to direct action in pulling out their investments,” he said. ”The loss of a job, a mother moving into a nursing home, the birth of a grandchild. Those kind of events affect their financial lives more than the movement of the markets.”
Tom Springall, 65, of Orlando, Fla., is Thompson’s kind of investor. He retired after 30 years with IBM and now runs a center offering computer training to seniors.
Springall has shifted some of his investments into bonds in recent years, and feels relatively confident.
”The percentage of stocks in my portfolio is probably 30, 40. But if the stocks go down, I can still survive,” he said.
”The only smart way to play in the market is to invest for the long term. You’ll get ulcers if you read the paper every day.”
Jim Seith deals with a different class of elderly – the very poor – as director of an AARP program that helps find them jobs.
”With the economy going great guns, anyone who really wanted to work could,” he said. ”We anticipate that it’s going to get more difficult for our folks, not necessarily because they’re older, but because folks below the poverty line don’t bring very many skills.”
”We’re really worried,” he said. ”These people are very vulnerable.”
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