Amer­i­cans’ re­tire­ment real toll of volatile stock mar­ket

The Morning Call - - TOWN SQUARE - By David Win­ston

“I’m tak­ing a beatin’ on my re­tire­ment funds. I’m sure I’m not the only one.”

Those feel­ings ex­pressed by a 70some­thing re­tiree in a re­cent Mid­west­ern fo­cus group re­flect a grow­ing con­cern among av­er­age Amer­i­cans about their abil­ity to re­tire — and re­tire com­fort­ably — in the af­ter­math of one of the worst De­cem­bers in stock mar­ket his­tory.

Much of the fo­cus over the past few weeks has been on the gov­ern­ment shut­down and the cri­sis at the south­ern bor­der. That fo­cus isn’t likely to change un­til a com­pro­mise is reached and the gov­ern­ment re­opens.

Find­ing a so­lu­tion to our outdated and in­ef­fec­tive im­mi­gra­tion sys­tem is im­por­tant to both our na­tional se­cu­rity and the na­tion’s eco­nomic fu­ture.

But over the past month, mil­lions of peo­ple have un­der­gone a real scare about their eco­nomic fu­ture — their re­tire­ment. Both par­ties are go­ing to have to ad­dress the is­sues af­fect­ing peo­ple’s abil­ity to re­tire, given the roller-coaster ride that Wall Street has be­come and the in­creas­ing cost-of-liv­ing pres­sures in an era of liv­ing pay­check to pay­check.

A Wall Street Jour­nal anal­y­sis last year found that more than “40 per­cent of house­holds headed by peo­ple aged 55 through 70 lack suf­fi­cient re­sources to main­tain their liv­ing stan­dard in re­tire­ment.”

That’s a fright­en­ing statis­tic for a coun­try watch­ing around 10,000 baby boomers turn­ing 65 ev­ery day, plagued with high debt lev­els and fewer younger work­ers to cover Social Se­cu­rity costs. A com­bi­na­tion of so­ci­etal and eco­nomic fac­tors has cre­ated this in­creas­ingly se­ri­ous sit­u­a­tion.

A 2014 Pew Re­search Cen­ter anal­y­sis found that 52 per­cent of peo­ple in their 60s were fi­nan­cially re­spon­si­ble for ei­ther a par­ent or an adult child. That’s 17.4 mil­lion se­niors, with 1.2 mil­lion of them sup­port­ing both. For many, pay­ing that fam­ily tab means dip­ping into their re­tire­ment funds.

Add to that those hit with un­ex­pected health care costs, ed­u­ca­tion debt and, of course, the 2008 eco­nomic col­lapse and now the 2018 stock mar­ket losses, and it shouldn’t sur­prise pol­i­cy­mak­ers that re­tire­ment is be­com­ing a more im­me­di­ate is­sue.

Re­tire­ment pres­sures have been an un­der-the-radar con­cern for some time. Wash­ing­ton has known a re­tire­ment crunch was com­ing, but so­lu­tions to help re­lieve those pres­sures have been side­lined to deal with ur­gent, time-sen­si­tive chal­lenges — both for­eign and do­mes­tic — from job cre­ation and wage growth to health care costs.

But the ex­treme volatil­ity of the mar­kets and its im­pact on re­tirees and those about to re­tire are chang­ing the cal­cu­lus, and the cal­en­dar, for those re­spon­si­ble for craft­ing re­tire­ment so­lu­tions. For many peo­ple, De­cem­ber’s pre­cip­i­tous stock mar­ket drop was noth­ing less than an un­nerv­ing and un­wel­come re­turn to the emo­tional tur­moil that so many Amer­i­cans ex­pe­ri­enced in the fall of 2008 and early 2009.

Clearly, peo­ple are still strug­gling to make ends meet, but the re­cent loss of re­tire­ment sav­ings tied up in the mar­kets is the new­est el­e­ment in the cost-ofliv­ing de­bate, one that’s be­gin­ning to af­fect peo­ple’s view of the econ­omy.

Over the past month, our Win­ning the Is­sues sur­vey found that at­ti­tudes about the econ­omy are still pos­i­tive but have soft­ened. In the De­cem­ber sur­vey, 45 per­cent said the econ­omy was headed in the right di­rec­tion while 35 per­cent said it was off on the wrong track — still a good re­sult.

But the trend line is con­cern­ing. When asked the same ques­tion in the post-elec­tion sur­vey, peo­ple were more pos­i­tive, com­ing in at 51 per­cent (right di­rec­tion) to 32 per­cent (wrong track). But at the end of Novem­ber, it had slipped to 48 per­cent (right di­rec­tion) to 34 per­cent (wrong track), and now to 45 per­cent to 35 per­cent.

Given the re­cent volatil­ity in the stock mar­ket, we asked vot­ers in our De­cem­ber sur­vey to tell us which of the fol­low­ing state­ments best de­scribed the per­sonal im­pact of the mar­ket down­turn. Twenty-eight per­cent said they had been “per­son­ally im­pacted;” 32 per­cent said they had not been af­fected but were se­ri­ously con­cerned they might be; and 29 per­cent called the Wall Street de­cline se­ri­ously con­cern­ing but said it would not likely im­pact them.

But when put in the con­text of re­tire­ment, 4 in 10 re­spon­dents (39 per­cent) told us that, given the re­cent stock mar­ket de­clines, they be­lieved they would have to work a few more years than they had orig­i­nally an­tic­i­pated. An­other 39 per­cent said they were se­ri­ously con­cerned about whether they would ever be able to re­tire.

The im­pact of this past De­cem­ber’s record-set­ting volatil­ity and losses in the mar­kets shouldn’t be un­der­es­ti­mated. CNN Busi­ness called it “the worst De­cem­ber since 1931.”

In a re­cent RealClearPol­i­tics opin­ion piece, the Her­itage Foun­da­tion’s Stephen Moore and Al­fredo Or­tiz, head of the Job Cre­ators Net­work, warned that “Amer­i­cans have lost well over $4 tril­lion in wealth.”

How much of that $4 tril­lion loss damp­ened the re­tire­ment hopes and dreams of mil­lions of Amer­i­cans? That’s a num­ber we don’t have, but it’s prob­a­bly safe to as­sume that for those in re­tire­ment or near­ing re­tire­ment, this was a ma­jor fi­nan­cial set­back.

There was a time when sav­ing for re­tire­ment was a much sim­pler en­deavor. To­day, try­ing to pay for mom’s as­sisted liv­ing costs and pay off huge stu­dent loans or help­ing grandpa keep his house and meet your own mort­gage are keep­ing too many Amer­i­cans from putting away the funds they need for a se­cure re­tire­ment.

It may not be a Wash­ing­ton cri­sis yet, but the is­sue of peo­ple’s un­der­funded re­tire­ments should be. Its im­pact is com­ing faster than we think.

David Win­ston, pres­i­dent of The Win­ston Group, is a long­time ad­viser to con­gres­sional Repub­li­cans. He pre­vi­ously served as the direc­tor of plan­ning for Speaker Newt Gin­grich. This com­men­tary was writ­ten for CQ-Roll Call and dis­trib­uted by Tri­bune News Ser­vice.

BRYAN R. SMITH/AFP/GETTY IM­AGES

The U.S. stock mar­ket had its worst De­cem­ber since the Great De­pres­sion, with the Dow Jones In­dus­trial Av­er­age, Nas­daq Com­pos­ite and S&P 500 each down by about 10 per­cent.

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