When Poverty Strikes
Oh dear.
That pretty much sums up what’s happening with my retirement accounts. I’ve been through recessions before in my adult life. The first big one occured while I was attending/graduating college. I still managed to find retail jobs all throughout college and a full time job when I got out. I wasn’t making much ($20,500/year that first year), but I was able to survive with room mates and I was happy and independent.
The next recession hit around 9/11. Again, I had minimal investments so I didn’t lose much. But I had a stable job at Harvard so I wasn’t too worried. Hell, I even purchased my first condo at that time (thanks to the low interest rates and a real estate market that was climbing, but not yet obscenely expensive).
Now it looks like we’re heading into yet another recession. Although this time, I actually have a reasonably substantial amount in my retirement accounts (a 403(b), roth IRA, etc…) and they are taking a hit…and fast. In November alone I took a loss of 4.9%…in one month.
But it gets worse. In the first two weeks of January (TWO WEEKS) I’ve already lost an additional 7.9%. I have to repeat this again….TWO WEEKS! So, in the last two months, that means I’ve lost nearly 13% of my savings (and I’ve invested in thie “moderate/conservative category). So, let’s say I had $100,000 in there to begin with (I didn’t, that’s just an easy number to round to), that means I had $100,000 on November 1 and only $87,000 today.
Ouch – that hurts.
Of course, I immediately called my financial planner (who said she’s been fielding calls like mine all month). She said what I expected to hear (and historically is what has been proven) which is to stick it out and think of my investments as longterm investments – which they are. And, on the plus side, any contributions I’m adding to the plan now are being bought at the lower rates (buy cheap, sell high). Of course, that doesn’t help the money that’s already in there and tanking. But what goes down must come up, right? RIGHT?
Anyway, I’m not all that worried since i’ve got, oh, at least 3 more decades before retirment. But that really smarts.
There’s something to be said for the whole cash under the mattress investment plan.
3 Comments
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Yeah, it’s like putting water in a bucket that leaks…
Planner is right, of course, and if you’re not retiring for awhile it’s actually irrelevant and don’t worry about. But….the kicker is always what will it be doing when you need to retire – so of course it will go back up but at the precise moment you need it – will there be another recession going on. Just pity the poor people who are retiring now!
Maybe you shouldn’t check your retirement accounts every day. If you do you might not make it to retirement anyway. People die of stress all the time.