Saturday, May 09, 2009
With pensions gone, retirees are back in the job market
FT: Desperate ‘baby boomers’ return to work
60-year old Eva Coffey had planned for retirement before the recession hit. Her and her husband have two [terraced houses] as investments, but these have dropped in value from $450,000 each to $275,000 for the pair. Their savings, which were largely in mutual funds, have halved. “I’m not going to retire. Can’t afford it,” she says. “You still have to put the food on the table and [petrol] in the car.” Instead of pushing older Americans like Ms Coffey out of work, the economic slump has forced more of them back into it. Before the recession, about 15% of baby-boomers said they intended to work until they died. That has risen to more than 25% according to one survey.
Posted by drewster @ 09:30 AM (524 views) Add Comment
8 Comments
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1. japanese uncle said...
This couple could have done much better had they put all their wealth in cash deposits. All the troubles, hassles and worries for those 'investments' meantime, tuned out to be absolutely useless and waste of time. They could have spent time for much better purposes such as listening to good music, reading good books, and growing flowers/vegs, etc. instead. Good luck.
2. Enough Already said...
I notice that these people are American. Their 'state' pensions are far, far worse than ours. Also, do they realise how lucky they are to own two houses to call their own. Many young people today have no houses whatsoever. With 'babyboomers' hanging on to their well paid jobs (and, in the UK, having their state pension 'saved' for them as well) - our younsters will never get the chance at owning one house. Let alone two! This generation have had 'champagne' all their lives - they find it obscene that they now have to settle for 'cider' like the rest of us.
3. drewster said...
JU,
Unfortunately with US interest rates at 0.25%, this couple wouldn't have had much income from their money. With a pot of $450,000 at age 65 they could buy an annuity giving them $17,000 a year to live on - not much to live on really.
4. japanese uncle said...
drewster
Still they could have been better off using the principal of their savings for a few years until the zero-IR regime is blown over.
5. lenny said...
2. drewster
If they put their cash into CD's (term deposits) now they can get just over 3%. If they did so last year they could have got 5% to 5.5% per annum on a 5 year fix so a bit more without giving up the capital for an annuity.
6. mander said...
Ms Coffey and her husband have two townhouses as investments, but these have dropped in value from $450,000 each to $275,000 for the pair.
There is no way you can have poor working people transformed in investors like the Coffey family. No No No . Poor people.
7. japanese uncle said...
People must be aware of the risk associated with their investment. IMHO, 95% of those 'investors' are not really qualified to make any investment at all, due to their limited knowledge in finance/economics/investments. Last week Barcrays was under fire because of their 'mis-selling' of their high-risk funds sold as as low risk investment. This is non-sense. If those pensioners were really after low-risk investment, they should have read the small letters of the brochures for those funds, and opted for cash savings instead. There is no free lunch in the world and they are old enough to know that.
Thus 'financial education' in schools must begin like 'Unless you are quite sure what sort of investment you are about to make, you really should opt for postal savings scheme, and other safest schemes, as everyone must know his or her own limitation'.
8. Serious Guy said...
J U .. do you really think TPTB want financial education taught in schools?
They can't have that happening ,they can't have people coming out of school thinking that credit is really DEBT or having a mortgage you really do not own the joint!
Financial education is stepping out of school(UNI etc) straight onto the hamster wheel getting as much credit(mortgages,credit/store cards,car loan etc) as possible and that way you will be judged as an upstanding citizen!