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Devaluation of portfolios worries Aspen retirees

Katie Redding
The Aspen Times
Aspen CO, Colorado

ASPEN ” When Aspen resident Joanne Johnson was told she would need a knee replacement within three to five years, she put enough money aside to pay for the anticipated operation.

She carefully invested the money into stocks, bonds, mutual funds and certificates of deposit, she said, speaking at the Pitkin County Senior Services center on Wednesday. In June, the certificates of deposit matured, and she invested even more money in the market, through a brokerage firm.

But after Monday’s stock market crash, she worries that too much of that money may now be gone ” and that she could end up unable to pay for the operation. Unlike a younger person, she said, she doesn’t have the time to wait until the stock market goes back up. And if she can’t pay for surgery, she could end up in a wheelchair, she explained.

“I have no idea what’s going to happen,” she said.

Most Aspen residents have been affected by the recent market ups and downs, but perhaps no one more than those about to retire or already retired, many of whom depend on investment income to pay their monthly bills.

“This is the most extreme thing I’ve ever been involved with,” said Mark Thomas, a local retirement planner who has been in the industry since the early ’80s. He spent most of Tuesday fielding calls from concerned clients, and concerned investors in general, he said.

“That’s all I’ve been doing is servicing accounts I wouldn’t normally be servicing,” he said.

While Thomas expected the bailout to minimize “the depths of this,” he argued that it could take years to get out of a predicament America spent years getting into.

“We’re all in this for the long run,” he said.

Unfortunately, not everyone can afford to wait out the “long run.”

“You just hope that you can hang on and not have to liquidate [your investments] for your living,” said retiree Barbara Stanford. She pointed to the obvious fact that retirees can’t simply go back to work to earn more money if the market doesn’t perform well. And many of those at the senior center said that they depend on dividends and Social Security their monthly bills. Most hadn’t checked their portfolios since the crash ” but they were worried.

Sara Garton, recently retired from The Aspen Times, said that while most of her friends know to “sit tight,” some have panicked and are talking about pulling everything out of the market.

“But I hope they haven’t done that,” she said.

So far, she’s lucky, she said ” she’s paid off her house and has enough in liquid assets to ride out the immediate downturn. She’s hoping the market starts to recover before she needs to start using the dividends from her investments for living expenses.

“If I had a mortgage, though, oh my god,” she said.

On Tuesday, the American Association of Retired People posted an article on its website explaining the crisis to seniors. The article suggested people “remain cool” and resist the temptation to make big changes in their investments. It argued that the most important evidence that the stock market would eventually go back up was that renowned investor Warren Buffet is on a buying spree. The paper, however, makes no mention of what seniors should do if dividend declines are making it difficult for them to pay their bills.

In part, that may be because it will take a few weeks for the crash to catch up with seniors. Roger Doherty, business manager for the Colorado Gerontological Society, said the agency is not yet fielding calls from seniors struggling to make ends meet. But he anticipated that they would be soon, if the market didn’t rebound. He noted that he had just lost 25 percent of his own retirement portfolio, and he imagined that most people were in the same predicament. In the meantime, he said, the agency is busy enough helping seniors affected by the housing market decline.

Thomas said that although he’s receiving a lot of calls from people ” retired and not retired ” who want to get out of the market entirely, he never recommends that people actually do that. Instead, he suggests people “stop the bleeding” and re-work their money in a safer way ” such as by putting it into annuities.

Meanwhile, at least a few retirees are frustrated with how those in charge have been handling things.

“I have not trusted the government since Nixon, so I’m not surprised,” said one woman. Another said she blamed the Republicans who have been in charge and the legislators who ignored clear warnings.

“You really kind of think those masters of the universe are masters,” said Garton, thoughtfully.

kredding@aspentimes.com


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