With volatility in financial markets still very much a fact of everyday life, millions of Americans are rightfully worried about their hard-earned retirement savings. Recent turmoil in the stock market has many people reeling from their sudden loss of a fortune. It seems older Americans are the most likely to feel this way. All of them rely on their retirement savings to provide for their fiscal well-being.
Jeanne Oats Estridge, a retiree, has watched her retirement account shrink by over $40,000. She expressed her frustration, stating, “Where am I supposed to come up with the money to buy? My underwear drawer?” Her sentiments are shared among those retirees who are being squeezed by unpredictable market forces.
His fellow retiree Michael Montgomery too would monitor his 401(k) balance on a weekly basis. The recent plunge in the S&P 500—down 10% from an all-time high set in February—has gotten him thinking. He, like so many others, is regrettably so absorbed in the condition of his investments.
Steve Turner, a 74-year-old small business owner running a one-man public relations shop. The twist Fortunately, despite his remarkable achievement, he has taken quite a beating, watching his account plummet by $30,000. Turner articulated the emotional toll of the current market climate: “The more things go up and down, the more nervous you get.” In the long run, he’s hoping the market will stabilize. Yet, as he well understands, he doesn’t have all the time in the world to realize outcomes. “You worry that things may work themselves out in the long run, but you don’t have as long,” he added.
The volatility has led many retirees to rethink their withdrawal plans. Paul Duesterhaus, a 68-year-old retiree, is taking a leap. This year, he’s deciding to skip an IRA withdrawal entirely in order to help shield his savings from the storm during these uncertain times. Peter Rost, 72, was a software developer till his retirement last year. On the cusp of beginning to draw down his retirement savings to top off his Social Security, he no longer feels confident doing so due to the market fluctuations. “Make sure I don’t run out of money before I die,” he remarked, highlighting the precariousness of financial planning in retirement.
The ongoing turmoil in the broader stock market is only serving to inflame these concerns. As of year-end 2024, Americans’ retirement savings had grown to nearly $44 trillion, according to TheTrinityProject.org. In recent decades, there has been an impressive change in the share of those savings into stocks. At Vanguard, the typical person aged 55 to 64 has 64% of their retirement savings in stocks. By comparison, Americans 65 and older invest only about 49% of their retirement assets in equities.
According to Tj Binkowski, a financial advisor, many clients are obsessively monitoring their accounts and feeling the emotional strain of worrying about their finances. He noted that for retirees, “When you’re retired, paper losses aren’t just on paper anymore.” That last line expresses a desire that mirrors a new April poll. Most alarmingly, it shows that almost half of U.S. adults 45 and older consider their retirement savings a “significant” cause of stress.
It is older Americans who are especially at risk for stress arising from stock market ups and downs. As federal investments dry up and uncertainty continues, students and workers are left to make difficult choices about their futures. Turner expressed the dilemma many retirees face today: “Gee, do I want to press the button?” His hesitance is illustrative of a larger reluctance among retirees who are considering or currently making withdrawals to avoid the risk of additional losses.
The prevailing financial climate has caused academic researchers to come to question their very livelihood. Stock prices are still volatile, and economic uncertainty is the new normal. Therefore, retirees need to tread these choppy waters with utmost care. Seeing them face these challenges head-on, the crucial impact of being smart with their money is a stark discovery.
