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Economic situation has people closing in on retirement concerned

October 04, 2008|By ARNOLD S. PLATOU

A retired Navy engineer, Keedysville's John Murray has a government pension that he figures is safe and some stock investments that he knows are "getting clobbered."

Erik Fuss, 43, of Smithsburg, figures his retirement investments have been hurt so badly by the stock market's huge losses, "I'm going to be working an extra six to seven years" to make it up, he said.

And government retiree Sue Duncan of Hagerstown is worried about lots of people, starting with her children.

"What happened yesterday makes me angry because of my kids," the 61-year-old Duncan said Tuesday -- the day after the Dow Jones industrials plunged nearly 800 points.

"They work in private industry and they have a retirement account, and if the company goes under, their retirement accounts could be wiped out and they could lose their jobs. ... My daughter said she didn't even want to look at her 401(k)," Duncan said.

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The seismic shock that spread to mainstream America this week after the House of Representatives failed to agree on a way to stabilize the nation's wildly pitching economic markets shakes us all, said Murray, 63.

"This is going to hurt me more than those on Wall Street," Murray said. "It'll hurt all of us. As the credit markets freeze, it affects people going to get an auto loan, the value of housing goes down and this (congressional failure) just exacerbates it."

Delaying retirement

Among those who might feel the economic effects first are retirees whose income is tied to investments.

But those thinking about retirement also are affected.

A survey by the American Association of Retired Persons (AARP) this past spring, when the economy had slowed considerably, found that nearly one in five people between the ages of 55 and 64, and about one in four between the ages of 45 and 54, planned to delay retirement because of the economic downturn, according to an article at aarp.org.

Nearly one in three people ages 45 to 54 blamed decreasing housing prices, the article said. And, it reported, a third of those ages 55 to 64 said they postponed plans to retire because of shrinking financial portfolios.

Gaye McGovern, whose Hagerstown agency sells insurance and retirement packages, said she's received calls from clients this past week, asking, "'Is my money safe?' Or, 'How's my mutual fund doing? Am I on track to meet my goals?'"

So far though, "I haven't had anyone who's already retired (and) who's extra anxious," she said.

Lisa Haas, a registered representative at Walnut Street Securities in Hagerstown, said her agency hasn't received many calls of alarm. But that might be because the staff has been calling clients to reassure them, she said.

"It is a tough economy," Haas said. "Obviously, there's a lot of concern out there. ... I do recognize the panic that might be out there.

"... Basically, if you retire and you're holding a large position in equities and you encounter a large downturn, that first down year, it's like getting off on the wrong foot.

"By the same token, this may be pretty close to the bottom and it's all uphill from here. It's hard to say."

Haas said that the reality of what has happened to personal investments might hit home soon -- the third quarter for business ended Tuesday. Corporate reports will be going out soon.

After losing 778 points on Monday, the market regained 485 point on Tuesday. It slipped nearly 20 points on Wednesday, 348 points on Thursday and 157 points on Friday.

For the year, as of midweek, the Dow was down 18.35 percent, according to The Associated Press.

McGovern said people should make regular, preset contributions to their investments over a long period regardless of whether it's for retirement or education savings plans.

And one way to look at the market's plunge is as a buying opportunity.

"We're in a terrific sale period," McGovern said. "If they had a sale out at the mall that said '57 percent off everything,' don't you imagine the crowd that would bring?"

But most investors don't see it that way, she said.

"For some reason, we do the counter-intuitive thing unless we do an automatic investment plan, of which probably the best example is the 401(k)," she said.

Jim Stattel, 38, of Hagerstown, is among those who do see opportunity.

"I'm not planning to retire for 25 to 30 years anyway," said Stattel, a scientist at MedImmune, a biopharmaceutical company.

"It's just a cyclical thing going on," he said of the market gyrations. "In fact, because shares are down, I'm able to buy more shares back now."

Market swings

People such as Erik Fuss are tuned to the market's swings constantly because of where he works -- at a nonprofit medical organization in Chevy Chase, Md.

"As a nonprofit, we solely depend on our endowment," which is invested in the market, said Fuss, who has worked in the facilities department for 13 years. "So you really pay attention to the stock market."

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