Americans’ retirement accounts lost $2 trillion in past 15 months
How much pressure does this put on Social Security?
USA-Americans’ retirement plans have lost as much as $2 trillion in the past 15 months, Congress’ top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers’ savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.
“Unlike Wall Street executives, America’s families don’t have a golden parachute to fall back on,” said Rep. George Miller, the panel chairman. “It’s clear that their retirement security may be one of the greatest casualties of this financial crisis.”
FYI
NPR-U.S. Stocks Plunge On Recession Fears
U.S. stocks plunged 500 points on Tuesday as fears mounted that the credit crisis would drag the economy into a deep recession.
The slide capped the biggest five-day point loss ever for the Dow Jones industrial average. It has lost more than 1,400 points over the past five sessions, nearly 13 percent of its value.
The Dow fell 508 points to close at 9,447. The Standard & Poor’s 500 index lost 60 points to 996, its first close below the 1,000 mark since September 2003. The Nasdaq composite lost 108 points to 1,754.
The stock market continued to sink even after the Federal Reserve announced plans to buy massive amounts of corporate debt to encourage lending. Fed chief Ben Bernanke said the financial crisis could prolong the difficulty that the economy is facing, taken as a sign among some traders that a rate cut could be coming.
As stock prices tumbled, President Bush pressed European leaders to coordinate their efforts to ease the spreading financial crisis. Later, he tried to assure Americans that the U.S. economy will recover.
Speaking to employees of an office supply company in Virginia, Bush said he understood that anxieties were high as Americans’ retirement funds and savings were hit.
“Right now we’re in tough tough times, no question about it,” he said. “But you can’t convince me that in the long run we’re not going to get back on our feet again, and if anybody ever says that they don’t understand the American spirit.”
[...] Committee on Education and Labor wrote an interesting post today onHere’s a quick excerptThe upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers’ savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, … [...]
Fed orders emergency rate cut to 1.5 percent
By JEANNINE AVERSA
AP Economics Writer
WASHINGTON — The Federal Reserve has ordered an emergency interest rate cut of a half a percentage point to cope with the worst financial crisis since the 1929 stock market crash.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percent, to 1.5 percent. The action revives the central bank’s rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deterioriated, forcing the Fed to reverse course.
http://www.ajc.com/business/content/shared-gen/ap/Finance_General/Fed_Interest_Rates.html
Gosh.
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If Social Security were in trouble, this might be important.
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[ Medicare is in trouble; Social Security is fine, thanks. ]
People forget that investments are not secured – there is risk and that is why your return, when you were able to get one, was always higher than a bank rate.
With the trade deficit, job loss, outsourcing good jobs, insourcing legal and illegal immigrants, I did not feel the economy was sustainable. Especially with the two buffoons running for President, the corrupt corporate culture and traitors in the House and Senante. I divested all mutual funds and had them converted to CD’s last year with the exception of a guaranteed annuity.
I am nearing retirement age and did not want the risk. I do not remember things being this bad in the 70’s, because we had job security and goods and services other countries wanted and needed.
Until fair trade policies are demanded, greedy corporations are penalized financially for outsourcing and setting up tax shelters and investment made in America rather than China and India, I do not see this turning around.
GaP,
Awfully nice of you to want to pay a lot more for everything you buy, even with a smaller retirement nest egg.
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Me, I like looking out for the majority. Where I come from, we call them “consumers.”
Got a 100% membership in each and every economy I’ve ever looked at, but I might have missed a few.
After all, I’m no expert on Uganda, so I can’t say for sure that each and every human in that country is a “consumer.”
Just a hunch, that’s all.
John, this has absolutely no impact at all on social security. Those funds aren’t invested…they’re often taken to fill budget shortfalls, but this money isn’t invested in the market.
Al
The affect which was in a book Running on Empty which I read years ago forecasted that our current economy would led to further co-dependency on Social Security via the savings rate dropping. It makes it very difficult to index it which should have been done years ago.
David,
Right now, my retirement nest egg is looking a lot bigger by comparison. I may be in the lending business soon.
Yes, I would rather pay more for goods and keep an American employed. Silly me, but cannot see to helping out Uganda, or even Iceland, unless I and my country are fiscally sound.