Delaware State News
DOVER — Like millions of Americans, Susan Simpson recently got a disturbing piece of mail: the latest quarterly report on the status of her retirement account.
"I could have cried," recalled the 57-year-old bank teller supervisor, who lives several miles west of Kent County in Greensboro, Md. "My husband hoped to retire next year, but those plans are on hold now. Our 401 has really dropped."
As much as $2 trillion has vanished from 401(k) and other retirement savings plans since mid-2007, according to the Congressional Budget Office. If that’s accurate, those accounts have lost about 20 percent of their value over the last 15 months.
"People, naturally, are very concerned," said Joanna Daneman, a financial adviser with Edward Jones Investments. "They’re asking, ‘Will I be able to retire?’ and ‘Will I be able to stay retired?’"
Mrs. Simpson counts herself among the bewildered, saying she thought her stock fund was among "the safest."
"They say, ‘Just hang in, it will regain," she said. "We lost $20,000. I don’t know if it will regain that much."
Many experts say stock prices will rebound, as they traditionally have. But there’s much less certainty about when that it is likely to occur, creating anxiety for workers like Mrs. Simpson and her husband, Benn, a Delmarva Power employee.
"That’s all everybody talks about," she said during a visit last week to the Greentree Village shopping center in west Dover. "I can tell you, everybody’s worried."
Roughly two of every three American workers age 45 and older have lowered their retirement expectations, conceding that if the economy does not improve significantly, they will work more years and have less to show for it than they had anticipated, according to survey results released this month by AARP. The organization also reported that one of every two workers lacks pension coverage, forcing them to invest for retirement on their own if they hope to supplement Social Security benefits.
Dover resident Dorothy Harrison, 83, said she emptied her retirement account when her husband entered a nursing home three years ago, but she sees the effect of the stock market downturn on the next generation. "It’s sad for my children," whose mutual-fund investments have suffered, she said.
David F. Boothe, president of Boothe Investment Group of Dover, said the stock market will bounce back. "It has since 1792," he said. "It did after the Great Depression."
But stock prices still may not have hit bottom, Mr. Boothe cautioned.
"I don’t think the market is out of the woods," he said. "We have a lot of bad economic news out ahead of us."
On Wednesday, a day following that observation, the Commerce Department reported that retail sales had fallen for the third month in a row and by twice as much as expected. On Friday, new-home construction was reported at its lowest point in years.
Locally, last week brought news of 400 layoffs at the General Motors plant near Wilmington and the elimination of 400 of the 500 jobs at the Invista nylon plant — formerly owned by the DuPont Co. — in Seaford.
Yet, the economic situation need not seem entirely too bleak to someone with money to invest in stocks.
"If you wanted to own in a quality company, you can," at a lower price, Ms. Daneman said. "They always say, ‘Buy low and sell high.’"
But purchases should be spread across various sectors of the market to avoid the sort of meltdown experienced by investors who put too much faith in bank stocks prior to the mortgage-fueled turmoil among financial firms, she emphasized. "If everything you had was in finance, your portfolio really will look different from someone’s that is spread across the spectrum."
Dallas Lawter of Dover’s Lawter Planning Group said his typical client is at least 60 years old. Last December, he said, he determined a recession had arrived. In response, he moved scores of his customers’ investments from stocks to money market accounts and has left them there.
"Those people have not seen any volatility at all," Mr. Lawter said. "They’re not making money, but they’re not exposed to what’s going on in the market."
None of them panicked, even amid the scariest recent economic news, he said. "My phone did not ring, and I think that’s pretty neat."
Mr. Boothe turned to a more conservative approach in March 2007, shifting from stocks to bonds. Now, he said, is a good time to shift back — but only a little at a time. He advocates "dollar cost averaging," moving a set amount periodically.
Some investors avoid stocks altogether. Bonds, too.
Air Force veteran Anthony Giudici, 78, gladly counts himself among them. His Individual Retirement Accounts grow steadily, he said.
"All my money is FDIC-protected," said Mr. Giudici, a regular at Dover’s Modern Maturity Center. "My neighbor (whose retirement savings are in the stock market) said he lost 50 percent. He said he couldn’t sleep."
Mr. Giudici’s buddy and fellow Air Force vet Mike Ikeda takes the same approach, saying he never felt comfortable with the stock market.
"I don’t understand it," he said, "and I guess a lot of other people didn’t understand it, either."
