-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]]On Behalf Of James Beniger
Sent: July 14, 2002 5:49 PM
To: [EMAIL PROTECTED]
Subject: <toc>--Stocks' Slide Playing Havoc With Older Americans' Dreams
(K Zernike NYTimes)
---------------------------------------------------------------------------
Copyright 2002 The New York Times Company
---------------------------------------------------------------------------
www.nytimes.com/2002/07/14/business/14INVE.html
July 14, 2002
STOCKS' SLIDE IS PLAYING HAVOC WITH OLDER AMERICANS' DREAMS
By KATE ZERNIKE
As the owners of an Atlanta advertising agency that billed $40 million a
year, Jim and Jan Pringle were featured in a cover article in Inc.
magazine asking, "What's the best time to retire?"
In January 2000, with the Dow well above 10,000, they were confident they
had picked the right time. They took more than $2 million they had made
from selling their company and bought stocks. Their broker encouraged
them to take a month in Europe; instead they moved to South Carolina,
where they began building a dream house on the beach.
The Pringles have since lost about 75 percent of their investment. Far
from taking any trips to Europe, they have done what they vowed never to
do: mortgaged their house and gone back to work.
"I thought I would at least be able to take a break and think about what
to do with the second half of my life," Mr. Pringle, 63, said. "But I
didn't have a lot of options when the market went south."
To many Americans, the sustained slide in the stock market --
particularly last week's nose dive -- has been something to fret about, a
darkening cloud. But to many people at or near retirement age, it has
been a colossal jolt.
People in this age group -- 55 to 64 -- have had almost twice as much
money invested in stocks over the last few years as the average American.
But if that money took them higher during the boom years, raising their
expectations for living easy and dying rich, they have since fallen
farther.
Unlike younger investors, older ones do not have room to ride out their
losses, particularly those who, while swimming in capital gains, ignored
the basic principle of shifting from stocks to less volatile investments
as retirement drew near. Perhaps as a result, federal statistics show,
the same age group has been entering the work force at a higher rate than
any other in the last two years -- or simply not leaving.
In interviews last week from Hawaii to New England, older investors told
stories of losing the entire value of their portfolios, of canceling
travel plans and scaling back expectations. They used to stand mesmerized
outside storefront stock tickers, or glued to CNBC at home.
Now, they are looking the other way.
For these investors, what they thought would be comfortable retirement
years are now shrouded in anxiety, disappointment and, in some cases,
shame.
One 68-year-old man pleaded for anonymity as he told how he and his wife
had sold their home in Manhattan and their beach house in the mid-1990's,
planning to retire on the income of about $1 million he invested in the
market.
As tech stocks rose, so did his portfolio. He hung on despite losing $4.5
million over two years. But last year, with some of his stocks reduced to
pennies, and fearing that he would be "sitting in the street," he and his
wife took jobs at the Mohegan Sun casino in Connecticut.
"The market was going up so rapidly, it was easy to live off the
appreciated value of your assets," he said. "It was to some extent
delusional, thinking this thing would turn around and come back, but it
takes a while to come to grips with it. It hadn't happened in my
lifetime, that kind of demise. I was born during the Depression, but I
wasn't old enough to understand it."
Jacobo Black, 67, a retired real estate agent in Miami, said that he and
his wife, Sophie, had canceled plans for a trans-Atlantic cruise this
year. He could have used the distraction from thinking about the market.
"I feel so vulnerable," Mr. Black said. "Here I was with thousands of
dollars in savings and here I am losing it like water running through my
fingers."
Gena Lovett, walking along Laguna Beach in California with a group of
friends who, like her, are in their late 50's, said that she and her
husband, John, 57, would not be able to contribute as much to their
grandchildren's education.
"Our retirement is one-half of what it was a year ago," she said. "And
because John works for G.E., we have mostly G.E. stock. I suppose we
should have diversified, but G.E. stock was supposed to be wonderful.
John's simply not looking at retirement. We simply told our kids that
we're spending their inheritance."
The oldest retirees, those over 70, tend to have pensions and so rely
less on the stock market, economists say. Those approaching retirement
are far more likely to have 401(k) plans, which became the primary
retirement option offered by companies over the last two decades. As the
stock market swelled in the 1990's, so did those plans, and many people
looked at the big gains and thought they could retire early.
"Many retirees became complacent," said Mark Zandi, chief economist at
Economy.com, a consulting firm in Pennsylvania. "There was so much money
being made, they didn't do the normal shifting most people do. Many of
them were putting more in the market, thinking this was a quick way to
fund their retirement. They got caught."
According to Labor Department numbers quoted by AARP, the nation's
largest lobbying group for retirees, the number of people over the age of
55 in the work force rose by 8.4 percent, or 1.6 million people, between
June 2001 and June 2002, compared with far smaller gains in previous
years. Every other age group declined in that period.
"What do you do if you find yourself at retirement age without enough to
retire on?" asked John Rother, AARP's policy director. "You keep
working."
John H. Saxman, the chairman of the biobehavioral sciences department at
Columbia University's Teachers College, said he had begun his career
believing that if he set aside money each year, he could retire by 65.
"All I knew was that I didn't want to become one of those doddering old
professors who can never afford to leave," Professor Saxman said. "Now
I'm 63 and every time I try to think about a specific retirement date, I
look at my quarterly reports and realize I can't pick a date yet."
He said he had grown accustomed to seeing his Teachers Insurance and
Annuity Association-College Retirement Equities Fund grow 8 percent to 10
percent a year, until it began posting losses a year ago. His latest
quarterly statement arrived a few days ago, but he left it unopened, not
wanting to see how much money was gone.
"I get the feeling now it won't be next year," Professor Saxman said. "It
may be another five years."
Many people said they felt cheated at having to postpone their
retirement, particularly as every day seems to bring questions about
fraud, executive compensation or accounting irregularities at yet another
company.
"Obviously the stock market goes up and down, and the crap shoot is
whether you're going to retire at the moment that it's up or down," said
Gail Hovey, 62, who works for nonprofit groups in Hawaii. "But to have
all the accounting irregularities and all the fraud on top of it, it
makes you wonder who you can trust."
"I've worked hard all my life and been a responsible citizen." Ms. Hovey
added. "And it's not supposed to be threatened at this point."
But if the fraud has made people angry, the losses have made some more
philosophical.
"I really enjoy controlling my own destiny, rather than depending on the
stock market or corporate America," said Mr. Pringle, who started an
advertising agency with his wife, as they had done 29 years earlier, at
their retirement home in South Carolina.
Misfortune has also revealed pockets of pluck. Mrs. Pringle let off an
exasperated laugh as she told how she "retired, supposedly" but then
spoke enthusiastically about the new kind of pretzel, shaped like a golf
tee, that she is marketing at professional tournaments. She and her
husband have far fewer accounts than they did in Atlanta, she said, but
now they work overlooking the beach.
"When we got here, I said: `Lord, I am just going to come down here, do
good by you and do your work. What would you have me do?' " she said. "I
suppose this was what he had in mind."
---------------------------------------------------------------------------
Copyright 2002 The New York Times Company
---------------------------------------------------------------------------
*******
