Retirees worry about shrinking accounts
Posted September 30, 2008 5:42 p.m. EDT
Updated September 30, 2008 6:54 p.m. EDT
Durham, N.C. — Edy Thompson had been planning to retire soon to spend more time with her grandchildren, but steep declines in the stock market recently have made her more hesitant to give up her job.
"I'm wondering if I'm going to be able to retire," Thompson said. "The change in the market has really made that quite a tough decision."
Only about 20 percent of American workers have traditional pension plans, which means retirees are more dependent on savings plans like 401(k)s, according to AARP.
"It's a pretty bleak picture for seniors right now," said Thompson, who has installed a stock tracker on her Blackberry to keep up with changes in the market. "It's shocking. It's frustrating, but more than that right now, people are in a state of shock."
Financial planner Mike Sharples said retirees – and people nearing retirement – should evaluate all their assets, including cash, bonds and stocks, before making any moves.
"You need to look at everything, and not just the one part that is not doing well, which is what we all tend to do," Sharples said.
Everyone should have six months of expenses saved, he said.
"You have got to have emergency money set aside, and that needs to be in something safe and pretty liquid like cash, money markets (or) pretty short-term (certificates of deposit)," he said.
Sharples said the market will eventually come back, but deferring retirement could be the right thing to do in some cases.
"It's all a matter of time, and we just don't know how much time," he said.