Retirement And The Recession: Savings Destroyed For One Out Of Four Older Workers, Says AARP Survey (moving, dumped)

[TuborgP]

Originally Posted by mathjak107

i hate these generalized statistics they throw out. you have to look at those that make up those statistics.

they may have burned thru their savings regardless of the recession or not. . most people are never more than a few pay checks away from disaster even in the most normal times.

if anyone lost much money in their investments at this point it was bad planning or doing the wrong thing and not the recession.

recession or not these same people would most likely have failed anyway. who even knows what constitues "a savings" or how much it is.

with many having less than 2k in a rainy day fund it wont take much to deplete that.

I know folks who are fiscally responsible and got hammered. High income living in a high income area where housing costs are at a minimal high. On track to have their house paid for in their 60's. Lost a job and major income. High housing debt with inability to sell. Lost a job and health care benefits. Significant illness hurt them. Kids graduated from college with inability to pay back student loans. Tax increases to fund current levels of government service. Lose 150K job and you can go through a lot of resources in short order. Kids lose their job and you have to make a choice of your retirement or salvaging your kids life. Yes some was there fault with home equity loans to pay for college and decreasing home value and perhaps now being under water. Just read a study about how much more valuable the elite colleges are and how they are out of range for many people. Many who do/did attend were able to do so because their parents leveraged their equity to pay for the college. Now jobs may not be there or salaries are not what they use to be. Good people who were on a path of responsibility have gotten hammered.

In many cases those who implemented their retirement plans in 2007 are well ahead of those who continued working. I say that because they had their ducks in orders with their college graduate kids and if they sold their high income area home they did so at a premium.

[Lakewooder]

If they left their money in the same vehicles in 401Ks they should have come out OK. However, I do know people who went to cash and never went back into stocks or bonds - big mistake. I switched to all stocks -- but it was about five months before the bottom so my timing was off. My 401K has more than doubled from what it was back then..of course things could change again, so I'm not boasting.

But TubourgP is right, a lot of folks got hit with lay-offs and devastating declines in home values. I would say there are many sections of the Inland Empire of CA where most folks are $200K underwater. I wonder how long they will stick that out?

[HappyTexan]

Originally Posted by TuborgP

I know folks who are fiscally responsible and got hammered. High income living in a high income area where housing costs are at a minimal high. On track to have their house paid for in their 60's. Lost a job and major income. High housing debt with inability to sell. Lost a job and health care benefits. Significant illness hurt them. Kids graduated from college with inability to pay back student loans. Tax increases to fund current levels of government service. Lose 150K job and you can go through a lot of resources in short order. Kids lose their job and you have to make a choice of your retirement or salvaging your kids life. Yes some was there fault with home equity loans to pay for college and decreasing home value and perhaps now being under water. Just read a study about how much more valuable the elite colleges are and how they are out of range for many people. Many who do/did attend were able to do so because their parents leveraged their equity to pay for the college. Now jobs may not be there or salaries are not what they use to be. Good people who were on a path of responsibility have gotten hammered.

In many cases those who implemented their retirement plans in 2007 are well ahead of those who continued working. I say that because they had their ducks in orders with their college graduate kids and if they sold their high income area home they did so at a premium.

That doesn't sound prudent though. As you approach retirement you pay down debt, not take out more. Sounds more like they were living beyond their means with not much rainy day savings.

I do know what you mean though. I know people at work that are like that. The kids get the best of the best even if it means the parents take out a loan and putting retirement planning/savings on the back burner "for a while". There is a problem with that and the thought that one can "catch up later".

A guy I work with did just that..put 3 kids through college..their choice and 2 picked private colleges, paid for his son's wedding (because the DIL's family had no money) and just paid for his daughter (22) to go to Europe for 6 weeks. He's got his 30 years in and even has a pension but has overwhelming debt and has to continue working. And with stealth layoffs still occurring, he's pretty worried.

[cdelena]

These statistics show how difficult the environment has been but judging in hindsight is much easier than seeing it coming at the time. My plans contained too much risk so my retirement has gone from pretty comfortable to a bit more challenging.

I retired from full time employment in ’05 just a few years before a major drop which is the worse timing. My portfolio was too aggressive and did not allow rapid adjustments so I lost half in the drop and the recovery is barely back to even.

I counted on some contract work to supplement the first five years of retirement but the drop in business activity and restructuring of many operations has eliminated that option.

I had poor timing where a residence for sale had three contracts fall through as values were falling even though I had already bought a new home. I finally made adjustments to get the third buyer to close but it cost and the new home has dropped 25% in value limiting options going forward.

Health insurance has skyrocketed since my original plan and my move to very high deductibles has not paid off as we have had issues. Health expenses have been five times the initial plan.

So even though we did nothing that could be classified as ‘stupid’ some judgments that were not ‘conservative’ and unfortunate timing combined to notably reduce our retirement funding and flexibility.

So don’t be too hard to those that were in the wrong place at the wrong time. Fortunately for us we had enough resources to get through and will be OK.

[texdav]

I thni ts alos wise to remember tha this was article based on a survey during a recession.Its not a actual actuary report on those who filled out the survey.Also I have to say even during the 90's AARP had mnay f these same type retiremnt reports;i don;t really know why except they sell prodcut like insurance.Of curse there are always people who had the event of a lifetime effected and more now just like the 70's recession. But mnany more will fill out a negative survey also based on doom thinking ;is my belief.We have known for years that mnay wre over extented;many were never ready for retirement when it came. That has always been a pretty big number.So its another domm article based on a recessio survey by a magazine who has been saying for decades many are not ready for retirement.

[mathjak107]

Originally Posted by HappyTexan

That doesn't sound prudent though. As you approach retirement you pay down debt, not take out more. Sounds more like they were living beyond their means with not much rainy day savings.

I do know what you mean though. I know people at work that are like that. The kids get the best of the best even if it means the parents take out a loan and putting retirement planning/savings on the back burner "for a while". There is a problem with that and the thought that one can "catch up later".

A guy I work with did just that..put 3 kids through college..their choice and 2 picked private colleges, paid for his son's wedding (because the DIL's family had no money) and just paid for his daughter (22) to go to Europe for 6 weeks. He's got his 30 years in and even has a pension but has overwhelming debt and has to continue working. And with stealth layoffs still occurring, he's pretty worried.

i would think its still all proportional. if they are earning that kind of income and at 55 or older dont have a few years of money to live on than they are not even close to being ready to retire unless they have a big pension coming.

[lenora]

Those who needed to draw funds from their IRAs and were under age 59 1/2, were nailed. Assuming a 72T would not allocate enough funds to make up for full time wages, the person would have to withdraw enough to cover all expenses, plus pay a 10 % penalty in addition to taxes. Another consideration is the cost of non-subsidized, non-pretaxed health insurance. I know I would have decimated my IRAs had I needed to withdraw two full years of living expenses before I reached 59 1/2 years old. And, yes, I consider myself reasonably frugal.

[GLS]

Originally Posted by newenglandgirl

This flies in the face of other CD posters claiming that statistics show that "the seniors are all right." What gives?

Perhaps some of the difference can be attributed to your definition of "senior"? From my end of the looking glass, "over 50" or even "55" is not a senior, more like a "junior senior".

[TuborgP]

Yes there are many seniors who have been thrown off stride by the Great Recession. However many non seniors have also suffered. Are senior any worse off than others? Are they perhaps in better shape than the norm or is it worse?

[Curmudgeon]

[quote=TuborgP;19306813]Yes there are many seniors who have been thrown off stride by the Great Recession. However many non seniors have also suffered. Are senior any worse off than others? Are they perhaps in better shape than the norm or is it worse?[/QUOTE]

I think it has to vary. Those of us locked into Social Security and with legally protected, public pensions are fine. It's the rest I worry about. All too many didn't plan adequately, especially for contingencies.