Retirement accounts have lost $2 trillion so far

[strandinthewind]

This is why McCain will lose.

Again, we had trillions of dollars in surplus to see us through bad times when Clinton left office (which was the beginning of a relatively minor bad time then) . Then W cuts taxes and issued a rebate check, which did spark the economy, but then spent the surplus and borrowed likely that much more in his blood lust in Iraq, which is still costing us about $10 billion a month with no end in sight under McCain. Now, McCain wants to cut taxes and there is likely no way he can cut spending, which means Greenspan's statement about McCain's tax cuts being based on more borrowed money accurate.

Moreover, McCain wants to deregulate the health care industry so that each person buys his own policy (no more policy at work) -- Do the math

Retirement accounts have lost $2 trillion so far

By JULIE HIRSCHFELD DAVIS, Associated Press Writer

Americans' retirement plans have lost as much as $2 trillion in the past 15 months — about 20 percent of their value — Congress' top budget analyst estimated Tuesday as lawmakers began investigating how turmoil in the financial industry is whittling away workers' nest eggs.

The upheaval that has engulfed financial firms and sent the stock market plummeting is also devastating people's savings, forcing families to hold off on major purchases and even delay retirement, Peter Orszag, the head of the Congressional Budget Office, told the House Education and Labor Committee.

As Congress investigates the causes and effects of the meltdown, the panel pressed economists and other analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.

"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."

More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.

Orszag indicated the fear is well-founded. Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — lost about 10 percent between the middle of 2007 and the middle of this year, and lost another 10 percent just in the past three months, he estimated.

Private retirement plans may have suffered slightly more because those holdings are more heavily skewed toward stocks, Orszag added.

"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," Orszag said.

A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works. More than one-third of these workers have considered delaying retirement, according to the study, which also found that more than half now find it difficult to pay for basic items such as food, gas and medicine.

The hearing came just as workers are receiving — or about to receive — their quarterly retirement savings account statements, which are likely to show disheartening drops in the value of holdings.

Jerry Bramlett, the head of BenefitStreet Inc., a retirement savings plan administration company, said there's a risk that people will overreact to the bad news by pulling their money out of the accounts, which could add to their potential losses.

"For participants with many years of retirement, a drastic abandonment of equity positions in their retirement account will only serve to lock in as-of-yet-unrealized losses. Markets do go up and down, and 401(k) participants must try to think long-term," Bramlett said.

Still, he said workers should do their best to diversify their retirement savings accounts and "perhaps consider less volatile investments."

On the heels of enacting a $700 billion market bailout, lawmakers are searching for ways to help workers who are feeling the ripple effects of the financial crisis.

"What should we be doing to try to find a way to salvage the retirement position of American workers?" said Rep. Dennis Kucinich, D-Ohio, an opponent of the government rescue plan. Congress, he added, "rushed to protect Wall Street in hopes that some benefits would trickle down to workers."

The massive losses have already reopened a bitter and long-running debate about what role — if any — the government should play in helping workers save for retirement.

Some experts argue that the hefty tax subsidies that Congress has put in place in recent decades for 401(k) and other worker-contribution accounts have made people's retirement income less secure by shifting risks, decisions and costs from employers to people who often know little about investing.

"They are fatally flawed," Teresa Ghilarducci, an economist at the New School for Social Research, said of the tax-advantaged plans. "They're too risky, and it's not good policy to have workers run their own retirement plan. They want government help."

Common mistakes workers make include overinvesting in a single stock — often their company's — and participating in funds that carry large fees or involve excessive risk, the witnesses said.

"You cannot tell the participants at the bottom of your fund prospectus, 'Warning: Your psychology may lead you to make irrational choices,'" said Christian E. Weller of the University of Massachusetts Boston.

The current market turmoil adds to an already difficult retirement savings picture for Americans, who are increasingly shouldering the burden of managing and funding their own company-sponsored retirement savings plans as firms eliminate traditional pensions.

Even before the recent downturn, older Americans were on track to continue working longer. Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics. Over the next decade, the number of workers who are 55 and older is expected to increase at more than five times the rate of the overall work force, the BLS reported.

Falling home values and now the decimation of much of their savings could plunge older Americans into period of austerity not seen in decades, Miller said: "The fear factor is huge, and they don't see the availability of resources to them to get well."

Orszag said the situation has little precedent in American history.

"The period that we're experiencing is arguably the greatest collapse in confidence that we've experienced since the Great Depression," he said.

http://news.yahoo.com/s/ap/20081007/...own_retirement

[GoS]

Originally Posted by strandinthewind

This is why McCain will lose.

Again, we had trillions of dollars in surplus to see us through bad times when Clinton left office (which was the beginning of a relatively minor bad time then) . Then W cuts taxes and issued a rebate check, which did spark the economy, but then spent the surplus and borrowed likely that much more in his blood lust in Iraq, which is still costing us about $10 billion a month with no end in sight under McCain. Now, McCain wants to cut taxes and there is likely no way he can cut spending, which means Greenspan's statement about McCain's tax cuts being based on more borrowed money accurate.

Moreover, McCain wants to deregulate the health care industry so that each person buys his own policy (no more policy at work) -- Do the math
]

That is only one of the great many reasons. My grandmother voted for Bush. Not once, twice. She has been a Republican for most of her life. Now, she can't stand McSame, and not just because she had me as a propaganda machine in her ear. If Obama is winning over massive amounts of people (which he is!) like this, McCain stands no chance.

[ajmccarrell]

Originally Posted by GoS

That is only one of the great many reasons. My grandmother voted for Bush. Not once, twice. She has been a Republican for most of her life. Now, she can't stand McSame, and not just because she had me as a propaganda machine in her ear. If Obama is winning over massive amounts of people (which he is!) like this, McCain stands no chance.

There's a huge difference between offering consumers incentives to purchase their own plans and complete deregulation. However, targeted deregulation in the health care sector would be a great thing.

[strandinthewind]

Originally Posted by GoS

That is only one of the great many reasons. My grandmother voted for Bush. Not once, twice. She has been a Republican for most of her life. Now, she can't stand McSame, and not just because she had me as a propaganda machine in her ear. If Obama is winning over massive amounts of people (which he is!) like this, McCain stands no chance.

I agree.

And, I was for the Bush tax cuts because at the time we were entering into a relatively small recession caused by the collapse of the dot com companies, Enron, etc. All of that was due to deregulation. In other words, a dot com stock would go public and reach $200 a share on speculation - it was speculation because the company's earnings (if any) could in no way support that price in the conventional price models. People were riding the wave and it crashed hard. But, we could afford to quell that crisis with rebate checks and tax cuts, which , again provided a spark to light the economy. Sadly, W and McCain then went hell bent and leather bound into Iraq based on a lie and we are still paying for it. We did not need to go into Iraq and we could not really pay for it at that time, much less now. Now, McCain wants to keep up that insane spending and if anyone dares to talk against it by mentioning that maybe it's time for Iraq to spend its billions taking care of itself, they are "raising the white flag of surrender" wink wink.

Now, let's see how many hard working Americans we can fu*k over by deregulating the health care industry, because history demonstrates less government oversight always helps the common man

I mean please

[David]

I lost 17 percent in my IRA from July to now.

[strandinthewind]

Originally Posted by David

I lost 17 percent in my IRA from July to now.

OUCH!!!!!!!!!!!!!! That's gotta smart.

And, ordinarily, I'd say keep buying because you are betting more shares for a cheaper price and then you add the current tax free and current deduction advantage. But, I do not think many people will have the money this year to put into an IRA or other retirement program. Moreover, it would talk nads of steel to put money in the market right now. But, considering all th variables, at some point you have to get back in. Of course, in theory, when you get to be our age, you don't have the time to make the required money much less recover from the 17% loss.

[David]

OH MY GOD TODAY WAS A DISASTER!!

I don't think I'm going to retire until I'm 92.

[SteveMacD]

See, this is why I never bothered getting into the whole IRA thing. I've just been putting money in a regular savings account...BADLY at that. My goal is to party while I'm young and live off the dole when I retire. Subsidized housing + Social Security + Medicare + Medicaid + meals on wheels = good to go.

[GypsySorcerer]

Can you imagine how awful things would be if Bush had gotten his way and privatized Social Security?

[SuzeQuze]

Originally Posted by SteveMacD

See, this is why I never bothered getting into the whole IRA thing. I've just been putting money in a regular savings account...BADLY at that. My goal is to party while I'm young and live off the dole when I retire. Subsidized housing + Social Security + Medicare + Medicaid + meals on wheels = good to go.

Word. I'm currently living in my 401k which I liquidated to buy my condo. I saw this coming although it came faster than I expected. I don't know what it will do to the value of this place though. I bought it on foreclosure so it was well under market in April. Time will tell.

[estranged4life]

is odd is how Oklahoma is definitely showing what Forbes magazine predicted was true in the current ecomonical times for this state, and that would be this state is the most recession-proof in the US. I didn't believe that story when it was first published, but maybe it is true after all.

According to local news reports Oklahomans arent losing their retirement accounts like others on the East/West coasts. Oklahoma major financial institutions have zero interests with those on the coasts - and the housing market here is not a bust, but on the rise. Employment is unaffected, but there is a rise in jobs in the energy sector (Specifically wind energy and natural gas). Add to that the average price for a gallon of gas is less $3.00 statewide (I've seen plenty of places between $2.50-$2.77 a gallon)

I checked my retirement fund, and it is unaffected by the current financial stupidity going on in this country, and like all the men in my family, I will either work until I die or die before I retire.

[SuzeQuze]

Originally Posted by estranged4life

is odd is how Oklahoma is definitely showing what Forbes magazine predicted was true in the current ecomonical times for this state, and that would be this state is the most recession-proof in the US. I didn't believe that story when it was first published, but maybe it is true after all.

According to local news reports Oklahomans arent losing their retirement accounts like others on the East/West coasts. Oklahoma major financial institutions have zero interests with those on the coasts - and the housing market here is not a bust, but on the rise. Employment is unaffected, but there is a rise in jobs in the energy sector (Specifically wind energy and natural gas). Add to that the average price for a gallon of gas is less $3.00 statewide (I've seen plenty of places between $2.50-$2.77 a gallon)

I checked my retirement fund, and it is unaffected by the current financial stupidity going on in this country, and like all the men in my family, I will either work until I die or die before I retire.

Sweet! Glad to hear someone is so far immune (knocks wood).

[chiliD]

Originally Posted by David

I lost 17 percent in my IRA from July to now.

My 403(b) has lost 41.30% YTD. ALMOST HALF!!!

And, it's down 15% just in the last 10 days.

[gldstwmn]

Originally Posted by strandinthewind

Retirement accounts have lost $2 trillion so far

But the st0ck market has not crashed, it's just in a slump. Yeah right. If I hear one more of these talking head fools on television say that, I'm going to scream.

[gldstwmn]

Originally Posted by SuzeQuze

Word. I'm currently living in my 401k which I liquidated to buy my condo. I saw this coming although it came faster than I expected. I don't know what it will do to the value of this place though. I bought it on foreclosure so it was well under market in April. Time will tell.

Hopefully you'll do okay on the condo. I don't think housing prices have hit anywhere near bottom yet though. Tey haven't in my area.