Retirees tell me they have lost over 50% of their 401K Balance in the last year! (pensions, moving)

[katie45]

Originally Posted by RichCapeCod

Katie:

Wouldn't it have been better to have done a lateral move, while still in your protected qualified retirement account, into a MM fund. That would have kept your monies growth under the umbrella of the tax protected retirement account instead of pulling the funds out into a taxable environment?

Rich

It worked out better for me to open CDs and a money-market savings account. Everyone has to analyze their financial situation according to their own needs, etc.

[nancy thereader]

I'm glad I pulled a lot of it out last summer.

I did the same thing. Still worried, though, about the housing market.

[lchoro]

It's not only stocks. High-yield and investment-grade corporate bond funds have lost a lot of value. Retirees have the added disadvantage that they have to pull out a portion of their funds each year to meet their cost of living. If they're drawing down 5% of their funds each year and the value of the fund drops by 25%, they're probably in big trouble.

[cdelena]

Originally Posted by lchoro

It's not only stocks. High-yield and investment-grade corporate bond funds have lost a lot of value. Retirees have the added disadvantage that they have to pull out a portion of their funds each year to meet their cost of living. If they're drawing down 5% of their funds each year and the value of the fund drops by 25%, they're probably in big trouble.

You are exactly right. Our situation is one where some one-time expenses on top of the large drop in the portfolio have put us in a precarious situation.

We entered into retirement with a comfortable budget based on 4% withdrawal rate but now find ourselves needing a 7% withdrawal rate which clearly is not sustainable. Worse, is that we will have to weather this recession making it even more difficult.

We are cutting the extras from our budget (travel), have found employment opportunities in these times and after four years retirement are limited at best, and recognize it is a terrible market to sell property.

With few options we have little choice but to continue on knowing that dramatic changes in lifestyle are facing us in a couple of years if things don't improve.

[StealthRabbit]

Originally Posted by cdelena

You are exactly right. Our situation is one where some one-time expenses on top of the large drop in the portfolio have put us in a precarious situation.

... knowing that dramatic changes in lifestyle are facing us in a couple of years if things don't improve.

Right -O

While I'm not jumping off the cliff, yet... I don't feel this is gonna be 'all-better', like the dot.com crash. The USA has eroded world investment confidence, AND other countries are not in much better shape.

I'm looking at some serious options, much different than planned. I'm gonna be proactive while I'm young and healthy... will be funding our shortfalls through PT employment, tho opportunities are limited. I will be driving a truck on weekends if that is what it takes, and have my name in with local contractors who want dependable help on prevailing wage jobs. Currently we have some significant one-time expenses, (replacing siding on house so it will be ready to sell when (if) market opens) and medical costs are not cooperating.

One change... I will be painting my house next weekend rather than hiring it done... Hope I don't crash from the 30' ladder with my current medical choices. I also sold several spare items lately, tho there are not many buyers of ANYTHING at the moment. (I did get rid of an extra 50 mpg car today for 4x what I had paid for it, but the earnings won't even cover 2 months property taxes)

[Huckleberry3911948]

a loss has not occurred until a sale has transpired.

[nancy thereader]

a loss has not occurred until a sale has transpired.

True, but still , it is hard to see it on paper.

[taurus430]

Originally Posted by katie45

I pulled a large amount out of my 401k and invested in CDs and a high-yield savings account. Since I'm over 59-1/2, there was no penalty, just paying the taxes, which have to be paid eventually anyway. Have seen a larger return just on the savings account alone than I did from the 401k.

I would have suggested making a transfer from your 401K to a bank IRA (CD), that's what I did. You would not have payed taxes. Save that till you are older in a different tax bracket. As soon as I left a company, I rolled the 401K over to an IRA, I wanna control my own money.

[Vinegaroon]

If you are within 5 years of retirement, and you had more than 20% of your retirement in the stock market, I'm sorry, but you were asking for trouble. As you get closer to retirement, you have to move most of your portfolio into bonds or safer investments. Why anyone would continue to gamble with their retirement as they near that time is beyond me.

[taurus430]

Originally Posted by Vinegaroon

If you are within 5 years of retirement, and you had more than 20% of your retirement in the stock market, I'm sorry, but you were asking for trouble. As you get closer to retirement, you have to move most of your portfolio into bonds or safer investments. Why anyone would continue to gamble with their retirement as they near that time is beyond me.

I certainly agree. And if you are conservative, you should have IRA'S as laddered CD'S (cash).