As stock market volatility increases, millions of Americans are as worried as ever about their retirement nest eggs. And indeed, in information released just this week, the S&P 500 is down nearly 10 percent from its peak in February. This precipitous drop has led to understandable alarm among current retirees and those nearing retirement age. With every pang of hunger or the rising cost of eggs, Jeanne Oats Estridge, 71, is feeling the impact—and the squeeze—firsthand. Her retirement account has fallen by more than $40,000.
For the last twenty years, private sector retirement savings have become more and more stock-based. This sudden shift has put many older Americans at risk. According to Vanguard, members between the ages of 55-64 still have about 64% of their retirement assets invested in stocks. By contrast, Americans 65 and older have an average of 49% in equities. Retirees are more reliant on stocks than ever. As market conditions change, this dependence places them in highly vulnerable financial straits.
Steve Turner, a 74-year-old small business owner of a public relations firm, has seen better days. He is dealing with a more than 30% fall in his portfolio. In the short term, he decides to take out $2,000 from his retirement account. He’s appalled to learn that it has just been cut by $30,000. “You worry that things may work themselves out in the long run, but you don’t have as long,” he commented, reflecting the anxiety that many retirees share.
Now, instead of logging into his retirement account every week, Michael Montgomery is afraid to check it at all. Today, he steers clear of it to avoid the emotional rollercoaster of bear markets. The psychological effects of boom and bust are profound. As noted by financial advisor Tj Binkowski, he’s seen clients fixated on checking their accounts hourly. “When you’re retired, paper losses aren’t just on paper anymore,” he stated, emphasizing the tangible effects of market shifts on retirees.
Paul Duesterhaus, a 68-year-old retiree, is not taking an IRA withdrawal this year. He shares a reluctance to sell at a low point and would like to wait until conditions are more favorable in the market environment. His sentiment is shared among countless others who do not want to run down their savings in a time of uncertainty.
Peter Rost, 73, who retired last year from his software development career. He was just about to begin drawing down his retirement savings to add to his Social Security income. His concerns echo those of his peers: “Make sure I don’t run out of money before I die,” he remarked, highlighting the urgency many feel as they navigate their financial futures.
The emotional impact of worrying about all these monetary issues isn’t something that can be quantified. An April poll revealed that nearly half of U.S. adults aged 45 and older consider their retirement savings a “major” source of stress. Jeanne Oats Estridge expressed her frustration, questioning the feasibility of managing her finances in light of recent losses: “Where am I supposed to come up with the money to buy? My underwear drawer?”
This feeling of powerlessness and fear is exacerbated by larger economic factors. By the end of 2024, Americans had gained nearly $44 trillion in retirement assets. Of course, the volatility of the public markets can swing these figures drastically overnight. With so much hanging in the balance on what our leaders choose to make these investments in, the stakes haven’t been higher.
As markets continue to oscillate, many retirees are left wondering how they will sustain their lifestyles in the face of diminishing account balances. Steve Turner poignantly captures this sentiment: “The more things go up and down, the more nervous you get.”
