Retirement accounts have lost $2 trillion so far

[BoomerD]

I'm sure my union pension isn't worth the paper it's printed on right now. Where an annual pension credit WAS worth about $300/month at retirement, they warned us a couple of months ago that if things continued to go south, we'd be at $20/month/credit.

 

[BarneyFife]

They need to start hanging people on wall street. I'm sick of watching these ceo's come to washington in an escalade and answering a few questions and going home to their mansions. These people are thieves. HANG THEM.

 

[ultra laser]

Originally posted by: BarneyFife
They need to start hanging people on wall street. I'm sick of watching these ceo's come to washington in an escalade and answering a few questions and going home to their mansions. These people are thieves. HANG THEM.

I agree; I'd like to see the guillotine put back into action, however.

 

[her209]

Originally posted by: ultra laser

Originally posted by: BarneyFife
They need to start hanging people on wall street. I'm sick of watching these ceo's come to washington in an escalade and answering a few questions and going home to their mansions. These people are thieves. HANG THEM.

I agree; I'd like to see the guillotine put back into action, however.

I'd like to see the effectivity of water boarding in action.

 

[Ozoned]

My accounts with the losses, still show a yield of 18% annually. I expect at least to lose down to a 10% annual return before this is over.

 

[techs]

Originally posted by: Engineer

Originally posted by: LegendKiller
Fuck 'em. They caused this problem and are to blame, they should share in the downside.

Ohhh, these retirement accounts aren't just for CEOs.

Sorry, forgot.

Where's my fucking golden parachute then?

Sorry, no golden parachute in coach.
Next time fly First Class.

 

[Brovane]

Originally posted by: OrByte
this is pretty tragic.

My dad was planning to retire in december. I doubt that now.

My mom in 2 years. I doubt that now.

My Father in law in 8 months. I doubt that now.

this is pretty tragic.

edit: and all 3 went out yesterday and changed their contributions.

I hate to say this. If they were that close to retirement they should have a majority of there 401k out of stocks.

 

[her209]

Originally posted by: Brovane
I hate to say this. If they were that close to retirement they should have a majority of there 401k out of stocks.

+1

 

[Brovane]

Originally posted by: techs
http://news.yahoo.com/s/ap/200...ge/meltdown_retirement

Retirement accounts have lost $2 trillion so far
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.




Well, we can be grateful Bushes plan to take 25 percent of Social Security taxes and give it to individuals to invest never happened.
Imagine how f*cked Americans would be now.

The only people that would have been allowed to do this is people that are far off from retirement. This is a great time to buy. You have to take the long view if you are investing for retirement. It still amazes me how people just have no comprehension of what long term investment for retirement is about.

Personally my 401k has lost about 25% but I am comfortable with that since my retirement horizon is around 30 years away.

 

[Special K]

These points have already been made, but they are important enough that they should be repeated:

1. People who are near retirement should have a comfortable amount of their portfolio in bonds and cash to protect them against downturns like this. If their portfolio dropped so much as to affect their target retirement date, then they didn't plan their asset allocation accordingly, and their portfolio was too aggressive.

2. Young people should quit worrying and see this as a fire sale. Put as much money into your retirement accounts as you can right now.

 

[seemingly random]

The old saw "you just have to have a long term outlook" will not always work. The only question is whether that time is now or we can weather a couple of more meltdowns.

I'm sure glad I didn't put any money into index funds earlier this year. If we're really entering a period of stagflation, long term will be about a month for a while. If in doubt, start with a chart of the dow starting in the 1920s.

 

[AstroManLuca]

I'm lucky I'm young and just starting my savings. I'm getting way more shares for the money with prices so low.

 

[boomerang]

Originally posted by: Skoorb

Right now, you should be selling what's made you money and buying what's low.

Quit trying to time the market.

Isn't that what you're prescribing, though?

No, although I could see why it would look that way.

What I'm advocating is regular, systematic re-balancing of your portfolio. This re-balancing would occur regardless of what the market is doing. My statement above was an over-simplification that I now see could be easily mis-understood.

It's the converse of dollar cost averaging when purchasing. When purchasing, x amount of dollars goes towards your asset mix every pay period. (applied at the percentages you've chosen) Every pay period you buy more shares. Sometimes those shares cost more, sometimes less. Your purchases average out the cost of those shares. The net result being you never bought at the peak or the valley.

When re-balancing, you are selling shares that have increased in value to purchase shares of another asset class that have decreased in value. Once again, you are smoothing out the peaks and valleys. If you decide to re-balance every 90 days, you re-balance regardless of what the market is doing. If you haven't figured it out yet, this method forces you to sell high and buy low. Are you selling at the very peak, are you buying at the lowest low? Maybe at one given point in time that might happen. But you are selling shares that have gone up to purchase shares that have gone down.

For the sake of simplicity, assume you've determined that the proper asset allocation for you is a 50/50 mix of bonds and stocks. This is not a mix I am advocating, I'm using it as an easy to understand example. Stocks have been doing very well. Your mix is now at 40/60. You re-balance and sell off that 10% gain in stocks and buy bonds. Back to your 50/50 mix. You still have a position in stocks. You're still actively purchasing both every pay period. So, stocks are still doing well. Let's say 90 days have gone by and it's time to re-balance again. You already know what to do, same as you did last time. It seems like it might be the wrong thing to do. But you have a plan and must stick to it.

You wake up one morning to terrible news. The dot-com bubble has burst and stocks are heading down fast. It looks like the only safe haven to make some money now is in bonds. You jump online to look at your portfolio and lo and behold - you've got a lot of bonds!

With a philosophy like this, what the market is doing at any given point in time makes no difference to you. Remember those charts of the Dow I linked to? Steady growth over time. Over 100 years of data. What the market is going to do is no mystery. It's going to go up.

My examples here are just that - examples. I'm not telling you what asset classes to put your money in. I'm not telling how much to put in or when. I'm not telling you at what frequency you should re-balance. These are examples.

Your asset allocation will change over time. A young person fresh out of school will have a very different asset allocation than a person two years away from retirement. The young person can afford a lot of risk and the older one can't.

 

[StageLeft]

That does all make sense. I suppose the tendency is that if stocks do well and you're at 40/60 bonds/stocks, you may want to leave it there to keep sucking up what you think will be the momentum even though in some sense the markets have no momentum going forward, it's always in retrospect, because at any time the market can reverse course. :thumbsup:

 

[boomerang]

Exactly! Nobody knows what the market is really going to do at any given point in time. When is it going to bottom and turn around? Can anyone tell me?

 

[StageLeft]

Originally posted by: boomerang
Exactly! Nobody knows what the market is really going to do at any given point in time. When is it going to bottom and turn around? Can anyone tell me?

8358 bottom, October 24th. Buy big on the 24th!