Are seniors facing more problems considering of the economic downturn than other groups?
How has the current financial upheaval impacted seniors?
A whole bunch, according to a recent study entitled, How Is the Economic Turmoil Affecting Older Americans?
Published by the Urban Institute, the study notes that “the slumping stock market, falling housing prices, and weakening economy have serious repercussions for the 94 million Americans age 50 and older who are approaching retirement or already retired. Retirement accounts lost about 18 percent of their value by the past 12 months, and amidst January 2007 and May 2008, housing prices fell from 4 to 20 percent depending on where seniors live. Older Americans have little duration to recoup the values of their homes, 401(k) plans, and individual retirement accounts—all crucial parts of their retirement nest eggs. More and more older Americans are working to bolster their retirement incomes, but the rising unemployment rate, now 6.1 percent, limits their prospects. that fact sheet examines the impact of the ongoing economic turmoil on retirement savings, home values, and retirement decisions.”
The study additionally states that “the stock market lost 27 percent of its value amidst September 30, 2007 and September 30, 2008, a roughly $7 trillion drop. The loss has reduced the retirement savings of many Americans, particularly older adults.”
Of course, on September 30th the Dow Jones Industrial Average was at 10,850.66. Last Friday it closed at 8,829.04, more than 2,000 points lower.
The question raised by the Urban Institute is
Unfortunately, there’s a good case to be made for a “yes” reply. The reason? A lot of the devaluations seen during the past year involve the very assets most likely to be held by seniors.
For instance: Who is more likely to own a house, someone entering the workforce or someone who has 30 years of experience? Who is more likely to have a pension or a retirement history? Who is more likely to be directly invested in the stock market?
To term job losses have not been severe by historic standards, though unemployment levels will surely rise. For those who are retired job losses are not an instant issue.
However, what is a problem is the loss of value from homes and retirement accounts, and additionally the reduction of interest income from financial holdings.
If homes are worth less than it is more difficult to obtain the largest-possible reverse mortgage. whether shield values are down next selling produces less income and profit. And whether interest and dividend income falls that can impact daily budgets.
Keep your eye on the market — and hope that efforts in Washington to control the meltdown produce some relief.
For the Urban Institute Report, go to How Is the Economic Turmoil Affecting Older Americans?
Orginal post by Peter G. Miller
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