I imagine Peggy Lee crooning “Is that all there is?” as I flip through my quarterly 401(k) earnings report. Don't know whether to laugh or cry. It's that bad. How secure is your retirement, pal? The stinking rich corporate scoundrels making news will weather the stock market's nose dive just fine. The jolt they gave Wall Street with their cheating hearts won't affect their golden years. But it will change everything for countless Americans facing retirement sooner than later.
When 401(k) nest eggs faithfully cultivated for years are tragically depleted by fitful market declines, who can even think about retiring?
When people at or near retirement age saw their portfolios lose 40 percent or more in the past two years, financial reality rewrote many retirement plans. Some folks may have to stay put in the job market, retirees may have to re-enter the work force to supplement skimpy retirement income, others may just scrape along on meager savings and hope Social Security doesn't bottom out as the bulge swells with other retirees in the same boat.
Scary doesn't begin to describe the predicament of retirees who relied heavily on the stock market as a sound investment to meet and exceed future needs. During the boom years they dreamed of living on easy street in their old age. Many in the 55 to 64 age group got carried away with the notion of getting rich quick and dumped nearly twice the amount of money the average American invested in stocks. Now they're stuck with stocks worth pennies on a devalued dollar.
Join the club. Roughly 60 percent of American households have some sort of investment in the stock market. When company-funded pensions went the way of powerful organized labor - gone - the 401(k) plans became the primary alternative to funding retirements through managed mutual funds. Sure, investing in the stock market is a gamble, but you could minimize the risks, or so they said, with “safe” blue chip stocks or shifts to less volatile investments as retirement loomed large.
Wrong. The stock market's plummet into loser territory has pulled everything down. Stocks across the board have lost an estimated $6 trillion in value since the market peaked in March, 2000. Hard to fathom until a painful glance over 401(k) earnings shows half the money one has contributed over the years completely wiped out.
If you're lucky and time is on your side, maybe you'll recoup your losses over the cyclical moods of the market. But if retirement is drawing near and the money you put away for retirement - maybe the maximum allowed - is slipping away faster than you can figure, what then? Wall Street has been convulsing since the spate of corporate scandals and the resulting fear and anger gripping the country is even more unsettling than 9/11.
People are worried sick about being able to live out their lives with basic dignity and enough money to enjoy financial independence. There's an “ugly mood” in the nation, said one lawmaker, while ordinary investors watch helplessly as their retirement savings go up in smoke.
So now what? What's the fallback plan of the Bush administration and its belief that workers should be allowed to invest a portion of their Social Security taxes in stocks and bonds? How strong will the Social Security safety net be in a few years when the administration is done siphoning off its surplus to fund other projects?
Can the multi-millionaires running Washington even relate to the creeping panic that is taking hold across the heartland as stock market losses erode investor confidence and erase the retirement plans of many? Let's face it, federal lawmakers have a pension for life. The President and his Cabinet will retire to lives of luxury. Does anyone care about the little guy who has lost everything in the rigged corporate ballgame?
Mr. Bush can give all the rah-rah speeches about the strength of the American economic system from now to the mid-term elections, but his words will not resonate because his affinity for corporate America blinds him to the seriousness of its criminal behavior.
George W. will be a one-termer like his Dad, brought down by his inability to connect with the millions of average investors who have lost more than they've made this year and have no retirement, no future.
President Bush's actions to spend the federal government into a $165 billion deficit, ally himself with a corporate-friendly SEC chairman, and support less rigid congressional measures to prevent and punish corporate fraud are what Main Street sees as the true measure of his concern for their economic security. And those left holding the bag ask, “is that all there is” from this administration?
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