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LOL! · 04-01-2008, 06:23 AM

Americans Delay Retirement As Housing, Stocks Swoon - WSJ.com

Quote:

... has watched the value of his 401(k) and individual retirement accounts fall by roughly 20% so far this year, to a combined $240,000.

I wonder if that 20% is a typo because if one is about to retire, I would have guessed that their investments would have been a little less aggressive to prevent such a large short-term loss. Nevertheless, he's got to have another source of assets since $240K (or even $300K) is probably not enough to pay the bills.

73ss454 · 04-01-2008, 06:51 AM

I think he's down 240K which is 20% of his assets.

Poundkey · 04-01-2008, 07:01 AM

Quote:

Originally Posted by 73ss454

I think he's down 240K which is 20% of his assets.

Thay's the way I read it too. At least I hope it is....yikes!

My son (age 32) said his 401 was down a little over 8%. He's in one of the target funds I think.

W2R · 04-01-2008, 07:05 AM

And it surprised the guy in the article that his house in Blue Springs, Missouri wouldn't sell within a year for $290K?

Census 2000 tells us that the median home price in Blue Springs was only $108,300 in 2000, and I would expect the median price there is no more than $130K even now. His McMansion is a white elephant in a real estate climate like that, and probably he should have allowed 2-3 years to sell it. It looks like Blue Springs is about 15-20 miles outside of Kansas City, and if it is far enough out into the countryside the median time on the market could be awfully long.

Great article, LOL!, and I hope that not to many have their ER dreams similarly dashed. I suppose those that do will just keep paying into SS for the rest of us. Pretty sad.

Razor · 04-01-2008, 07:09 AM

"The slumping real-estate market in Sarasota, Fla., has damped the longtime retirement dreams of Betty Greenspan, 65. In 2005, she and her husband, Richard, a dentist, invested a chunk of their assets -- nearly $800,000 -- in two condominiums. At the time, they believed that real estate was a safer, more lucrative, bet than the stock market. They had hoped to sell the properties in two years and use the proceeds to buy a boat, which they would live on -- sailing around the Caribbean. They were so sure of their plans that they put a $15,000 deposit on a $400,000, 44-foot catamaran. "That was the fantasy," says Ms. Greenspan.
Now they are stuck with two depreciating properties. Home prices in Sarasota plunged an average of 15.4% from the fall of 2006 to the fall of 2007. Today, units similar to one of their condos, for which they paid $500,000, are fetching only around $400,000. They still don't own the boat, which is being held for them."

Putting money down on a $400,000 boat? Don't count your chickens before they hatch.

W2R · 04-01-2008, 07:16 AM

Yes, and they may be stuck with two expensive condos, but they could retire, live in one, and rent the other to cover additional expenses.

That is, they could do that if by "investing" $800K in the condos it is meant that the condos are already paid off. On the other hand, if they mortgaged them and engaged in creative financing schemes, they are probably SOL.

Razor · 04-01-2008, 07:48 AM

Sounds like the must have financed $200k of the condos if the put $800k into them and bought them for $1,000,000. I guess I would probably sell the condos, take the loss, forget about the boat and start eating beans.

Sarah in SC · 04-01-2008, 07:52 AM

Where do they find these people to interview? Sad, sorry for themselves, no idea of what is involved in being responsible for their own retirement income....what idiots!

dex · 04-01-2008, 07:54 AM

Quote:

Originally Posted by rachael24

Maybe this president can get our economy close to what it was when Bill was in office...I know it cant get worse LOL

why can't it get worse?

FinanceDude · 04-01-2008, 08:20 AM

Quote:

Originally Posted by rachael24

Maybe this president can get our economy close to what it was when Bill was in office...I know it cant get worse LOL

Bill Clinton had good timing, to say he was entirely responsible for the economy of the 90's is NOT responsible..........

Bestwifeever · 04-01-2008, 08:31 AM

I wonder why people like Richard and Betty Greenspan got pulled into the real estate flipping thing at their age (62 in 2005). I wonder if I should feel sorry for them. I guess I do a little but they are responsible for the decision they made. And now they are a statistic that will be used to scare the rest of us about gloom and doom coming. They made a bad investment and may lose what, 20 percent? If they had invested their $800K in risky equities and lost that we wouldn't even be hearing about them. They are all idiots.

Razor · 04-01-2008, 08:33 AM

Quote:

Originally Posted by FinanceDude

Bill Clinton had good timing, to say he was entirely responsible for the economy of the 90's is NOT responsible..........

Exactly.
Just like Reagan wasn't responsible for the economy of the 80s. He was just president when the economic cycle was on an upswing.

dex · 04-01-2008, 08:33 AM

The president really doesn't have any positive affect on the economy. The best tool they have is the tax code. But that only works if income taxes are high and you can lower them.

They can hurt it very easily but the pain is usually put off until a future time. Look at Johnson guns and butter policies - Vietnam and the Great Society. It cause an increase in inflation in the 70s that was exasberated by the oil shocks. The growth in the expandtion of those policies will put a crimp on future economic growth - "as the chickens come home the roost"

Anyone who thinks that Bill Clinton did something should be able to point to specific things he did.

HFWR · 04-01-2008, 08:38 AM

He was directly responsible for a boom in the dry cleaning business...

Razor · 04-01-2008, 09:15 AM

Quote:

Originally Posted by HFWR

He was directly responsible for a boom in the dry cleaning business...

Cigar sales rose dramatically too.

Independent · 04-01-2008, 09:23 AM

Our shift from Defined Benefit to Defined Contribution retirement plans has a lot of impacts.

One theory that I've seen is that in a DC world, retirement rates are closely correlated with consumer confidence. You'd expect that people would be more likely to retire when they feel good about the future than when they are worried about the future.

We are currently performing a "natural experiment" on that theory.

If it's true, it also means that people are more likely to retire when the economy is booming, and unemployment rates are low. And they are more likely to stay at work when the economy is poor and unemployment rates are up.

If we were to replace SS with "personal accounts", we would presumably see an even stronger connection between the economy and retirement rates.

Donzo · 04-01-2008, 10:07 AM

Clinton also made stopping at McDonalds during a jog vogue......:-)

tuixiu · 04-01-2008, 10:13 AM

While they both still enjoy their work, "we should be out on our boat," says Ms. Greenspan.

Tears well up in my eyes for those denied the 400k boat because of the unsteady markets. Rumors have it dispersal of oompa loompas will be limited soon as well.