Financial Crisis Sparks Retirement Concerns

July 1, 2015  |  

As Published by ABC 27 News

 

It’s a sign of the tough economic times: some people are afraid the financial crisis will prevent them from retiring when they had hoped. Deborah Ritchey of Harrisburg is worried about what’s happening on Wall Street, specifically, how it’s affecting her 401k plan.

“Well, I’m thinking I’m probably going to have to work until I drop,” she said. “Retirement is escaping me. It’s getting away from me and it’s not a possibility.”

Ritchey isn’t alone, according to investment adviser Peter LaBella. He says baby boomers on the brink of retirement are losing more than their younger counterparts.

“We all know that supposedly, within the last five years of retirement, we’re going to have our most money. That’s when those losses can be significant,” LaBella said.

LaBella doesn’t expect people to lose their entire retirement savings, but he said now more than ever is not the time to put all your eggs in one basket.

“Where you invest isn’t the issue. It’s how you invest that is the issue,” he said.

LaBella suggested reallocating money between stocks and bonds – and advised investors to know the risks.

“You shouldn’t leave yourself more exposed to the stock market than the loss you can deal with,” he said.

Some people, especially younger workers, might be tempted to tap into their retirement savings out of necessity and fear they might lose some money. But LaBella warned against taking the money and running. In most cases, if you tap into your 401k before age 59, you’ll pay income tax and a ten percent penalty.

“To pay a penalty and/or to bail out seems to be a large mistake,” he said.

Experts remind people that a 401k is a long-term investment and suggest an early withdrawal only as a last resort.