Older Americans feel weight of stock slump

By Seth Hettena
Associated Press

SAN DIEGO — Kathleen Dabbs had hoped to retire in style.

Now with her stock portfolio shrinking, she and her husband have had to redefine what that means. Their new vision of retirement is likely to include fewer trips and restaurant meals.

"We're scared. We don't know what's going to happen," said Dabbs, 58, who works part time in a gift store.

She said they could have paid off the mortgage on their home in the San Diego suburb of Carlsbad with all the money they lost in a high-tech mutual fund and other investments.

"We will make our sacrifices, but we won't be out on the street," she said.

The 2 1/2-year slide on Wall Street has hit older Americans especially hard. Retirements are being delayed, big expenses are on hold and some are considering going back to work.

Karen Anderson, a 66-year-old retired medical assistant in Sun City, Ariz., is thinking about looking for work in a retail store. Her mutual fund investment has fallen about 40 percent, forcing her to dip heavily into her savings.

"I can't afford to take a loss," Anderson said. "I've been taking money out of savings every month, and that's getting scary."

Anderson, who is widowed, said she'd sooner go back to work than depend on her children. She's reluctant to change her lifestyle.

"It's hard," she said. "I'm having so much fun here in Sun City that I really don't want to give that up."

She wouldn't be the only older person going back to work. The number of people 55 and older in the workplace rose by more than 8 percent, or roughly 1.5 million people, over the past year, according to the U.S. Bureau of Labor Statistics. Every other age group declined.

While it's tough to estimate how big a role the market malaise has played in the surge of older workers, there is no doubt that many are hurting.

"There's a lot of pain out there right now," said Steve Carter, a financial adviser in San Diego.

Carter said several new clients have walked into his office toting battered investment portfolios that have fallen from $1 million a few years ago to as low as $500,000 today.

Mary Hayes, a 51-year-old college program director in Albuquerque, N.M., hung on to her stocks even as they lost 40 percent of their value.

"Instead of selling, I have been like a deer in the headlights," Hayes said.

If it weren't for her husband's pension, she said, she would be in trouble. The stock market plunge "certainly would have affected me greatly if I was single and was only depending on my income and investments," she said.

Robert Moran, a 62-year-old retiree in St. Petersburg, Fla., said the recent upheaval in the stock market "affected my retirement a lot." He's seen his stocks fall 30 percent.

Many retirees over 70 are in a better position than baby boomers nearing retirement. Over the past two decades, many employers switched from offering pension plans to 401(k) plans that have left workers much more vulnerable to the bears of Wall Street.

"We've had this huge, monumental shift," Carter said. "It used to be all company money: The employer did everything. Now, for the most part, you're on your own."

Chuck Latimer, a 72-year-old AT&T retiree living in San Diego, has seen the value of his stocks drop about $100,000. But his pension, a lifetime of financial discipline and a distaste for paying interest have left him on solid financial footing.

"I was more fortunate than a lot of people," Latimer said. "I still have plenty."