[Pen-l] Retirement dreams disappear

[Louis Proyect <lnp3@xxxxxxxxx>]

http://www.cbsnews.com/stories/2009/04/17/60minutes/main4951968.shtml
Retirement Dreams Disappear With 401(k)s
60 Minutes: Older Americans' 401(k)s Have Plummeted; Many Fear They Will 
Never Get To Retire

[Go to link above to watch video of "60 Minutes" segment transcribed here.]

(CBS)  The effects of the current economic crisis have touched everyone. 
Even if you still have a good job and a paid up mortgage, chances are 
your monthly 401(k) statement will remind you that you've lost a good 
chunk of your savings.

Trillions of dollars have evaporated from those accounts that have 
become the prime source of retirement funds for a majority of American 
workers, affecting their psyche and their future. If you are still young 
enough, there's time to rebuild and recover, but if you are in your 50s, 
60s or beyond the consequences can be dire, and its drawing attention to 
the shortcomings of a retirement system that has jeopardized the 
financial security of tens of millions of people.

---

It was a gray, chilly morning in midtown Manhattan and a line of 
unemployed, mostly white-collar workers, stretched for blocks around the 
Radisson Hotel. More than 1,000 middle managers, stockbrokers, 
consultants, secretaries and receptionists had come hoping to find a job.

It was called a career fair, but there was no merriment - only a whiff 
of desperation.

Many of the people at the career fair have been out of work for months 
and burned through their liquid assets; their future, even bleaker than 
the present.

Alan Weir, who turns 60 this month, showed 60 Minutes his latest 401(k) 
statement, which he hadn't had the courage to open up.

"I'm afraid," he told correspondent Steve Kroft.

There's good reason for his trepidation: nearly half of his life savings 
have vanished in a matter of months.

"It went down again," Weir told Kroft, after opening the statement.

Overall, he said he was down about $140,000.

Asked if he thought he'd ever get that money back, Weir said. "I 
probably never see it come back. I was looking to retire, probably, when 
I hit 62. Can't do it now. I'll probably be working until I'm at least 70."

Until she lost her job, Kathleen Coleman had spent nearly 30 years 
working as an executive assistant on Wall Street. She doesn't have much 
to show for it.

She told Kroft her 401(k) was worth less now than it was in 2005. "And 
another one went down almost $40,000. One was 80 - 88,000. And then, and 
then it went down to 50(k)," she told Kroft, crying.

Coleman is 54 years old and lives alone. "I don't have any children. 
I've been a career girl all my life. And it's been a great career, and I 
don't deserve this," she said.

Asked if there had been some "nibbles" - potential job opportunities - 
she told Kroft, "All the nibbles I've had I get beat out by top models 
who can type. I have experience and dedication and loyalty, and I can 
make any boss shine. I can, if you're out there, I'll relocate anywhere 
for you."

"Psychologically, what does this piece of paper do to you?" Kroft asked.

"Oh, it crushes any rest I may get when I'm 65. I'll have to work for 
the rest of my life," she replied.

The saddest part of this story is that it is being repeated all over the 
country. In eastern Pennsylvania, 59-year-old Iris Hontz lost her 
accounting job and half of her 401(k) investments. She's now back in the 
workforce as a part-time cashier in a grocery store.

In Dearborn, Mich., Terry and Donna McNally are barely holding on; he 
lost his sales job in August. The condo they bought 15 years ago is 
worth less than their mortgage, and 40 percent of his 401(k) retirement 
savings is gone. Donna is the main provider now, running a daycare 
center out of their home.

Terry considers himself fortunate to have found part-time work greeting 
the bereaved at a funeral home and making lattes at Starbucks, where 
colleagues young enough to be his grandchildren have taken him under 
their wing.

Asked what the hardest part is, Terry McNally told Kroft, "I'm no longer 
sitting at a computer or driving in a car to a call. You know, suddenly 
I'm standing for four to six hours and greeting people or makin' drinks 
or tryin' to learn the process and the food business thing, which is 
very difficult."

"It's tough," his wife added. "But I'm proud of him at his age to be 
doing what he's doing."

"The 401(k) drop was tremendous, is tremendous at this point in time. 
And that's where the savings was, you know. That's our hurt right now," 
Terry McNally explained.

"We can't live our vision of our dream of retirement. That's the worst 
part. Many people can't," Donna McNally said.

That dream, Donna McNally told Kroft, was to have a log cabin in 
northern Michigan and live a nice quiet life. "And we can't do that," 
she said.

Neither one of them thought that they might be able to retire. "Can no 
longer see that day," Terry McNally said.

(clip)

---

http://www.nybooks.com/articles/22080
Volume 55, Number 18 · November 20, 2008
Trapped in the New 'You're on Your Own' World
By Robert M. Solow

High Wire: The Precarious Financial Lives of American Families
by Peter Gosselin
Basic Books, 374 pp., $26.95

When the Bush-Cheney administration proposed to replace Social Security 
with a system of individually accumulated, individually owned, and 
individually invested accounts, my first thought was that its goal was 
to take the Social out of Social Security. It took a few minutes longer 
to realize that it also intended to take the Security out of Social 
Security.

That attempt failed. In recent years, however, a mixture of public and 
private policy decisions and impersonal market developments has had the 
broad effect of shifting many financial risks from established 
institutions, including even society at large, to individuals who are 
unable to cope with them in an adequate way. Information may be 
impossibly difficult for citizens to process; or else the basic 
information may not be available to individuals or private groups. 
Sometimes the scale of the possible bad outcomes may be overwhelming. 
Sometimes the appropriate insurance market cannot function or just does 
not exist. The result is that individuals and families can be the 
casualties of situations that once would have been handled by a more 
centralized and more bearable allocation of risks.

The current turmoil in credit markets and the recession that is sure to 
follow are likely to drive this trend further. Banks, insurance 
companies, and other financial institutions have seen too many risks go 
sour. They will be more determined than ever to push further risks onto 
those needy borrowers who are too weak and too ignorant to bargain hard. 
Families, small businesses, and other borrowers of last resort will be 
under great pressure.

(clip)
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