The savings American boomers have diligently set aside for retirement is vaporizing.
As of October 7th, retirement plans had lost as much as $2 trillion over 15 months, or 20% of their value, according to the Congressional Budget Office. That has many boomers wondering how they'll be able to retire and whether everything they thought they knew about investing has been turned on its head.
Diversification across sectors and countries, for example, was supposed to protect investments, but few areas of the market have been spared. From the market peak in 2007, the S&P 500 is off 42.5%, the index of international stocks is down 49.4% and the emerging markets index is down by 55.8%.
In 1929, there was 140% turnover in the U.S. market; meaning the entire market of stocks was bought and sold almost one and a half times. Last, year it was 280%. It will probably be 300% to 320% this year. The bottom line is: only you can control the risk of your retirement nest egg by making wise choices on where to invest your money.
Source: BusinessWeek, October 27, 2008
Visit Blogging Boomer Carnival #90 to read about what boomers are thinking today.
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