Market volatility worrying retirees
Older Americans lost big in financial crisis
CHICAGO — The recent turbulence in the stock market is spooking some older workers and retirees, a group that was hit particularly hard during the most recent financial crisis.
There’s no indication, though, that the recent volatility has brought about largescale overhauls in retirement planning.
“There’s a lot of fear that if you have anoth- er event like 2008 and you retire the year before or the year after, you’re screwed. I’m not taking that risk,” said Mark Patterson, a recently retired patent attorney from Nashville, Tennessee. “There’s a huge fear of folks my age that they’re going to run out of money and they’re going to need to rely on the government for help.”
By the time the market bottomed out during the financial crisis in 2009, an estimated $2.7 trillion had been wiped out of Americans’ retirement accounts, according to the Urban Institute. Older Americans, in particular, have had a tough time recovering their losses. The Pew Research Center estimates the net worth of the median Baby Boomer household in 2016 was still nearly 18 percent shy of where it sat in 2007.
In the two years since President Donald Trump’s election, 62 percent of Americans — and 76 percent of those 65 and over — don’t believe their financial situation has improved, despite the rise in the stock markets, according to a recent Bankrate survey. Nearly 1 in 5 respondents said their finances have actually gotten worse.
Paul Kelash, vice president of consumer insights at Allianz Life Insurance Co., said the market fluctuations throughout 2018 look less like the prelude to a retirement savings crisis and more like a return to normalcy after a remarkably steady market run.
As such, he hasn’t seen much evidence of Americans drastically altering their retirement plans.
“We get the feeling that folks are getting more comfortable with volatility,” he said.
Patterson gradually began stepping away from his law practice in 2016 — a decision he said was motivated in part by the stress of his job, his relatively stable finances and a “re-evaluation of priorities” after losing his wife of 35 years in 2013.
Now, 68, Patterson said he still has some “discretionary spending” money invested in stocks and riskier assets. But he said he was reluctant to put too much money into a stock market that soared throughout 2017, a decision he said was driven in part by memories of the 2008 financial crisis.
“I can retire in 2018 and not be sweating bullets, because I put together a budget and I protected it,” Patterson said. “The thing that the crash in 2008 taught me is that, even though my portfolio was well set up, that was a black swan type of event. Even if you had a balanced portfolio, everything went down.”