Retiree Leda Gismondi is a savvy investor who has belonged to an investment club for more than two decades.
Gismondi, 85, who quit working in the early 1990s after a marketing career at the former First National Bank in Uniontown, pays attention to the stock market, reads financial news and studies company profiles before making investment decisions. Still, the Uniontown woman is reeling from heavy losses to her portfolio in recent months.
"In my lifetime, this is the worst my financial picture has ever been. When you are younger, you have time to recoup your losses over time. There are a lot of buying opportunities now for young people," said Gismondi, who draws retirement income from a pension and investments.
"At my age, there's no time to recover."
Older retirees who rely on investments could suffer more than any segment of the population in coming years as the turmoil on Wall Street rolls onto Main Street, retirement and financial experts predict.
At a time when many companies have switched from traditional fixed pensions to defined contribution plans, such as 401(k) accounts, many retirees are more vulnerable than ever, experts say. They have saved less, can expect to live longer and will face greater financial risks than any retirees since World War II, according to a survey by the Employee Benefit Research Institute, a nonprofit research organization based in Washington, D.C.
The volatile market conditions, coupled with a credit crisis and housing slump, are creating economic uncertainty for many, particularly retirees who planned to rely on the equity in their homes as a safety net for their golden years.
"People thought they were fixed for retirement, contemplating travel and comfortable lifestyles," said John Laitner, director of the Michigan Retirement Research Center. "Now, they're finding they are not so well off as they thought, so they're contemplating going back to work, and those who are still working are thinking of extending their work."
In recent weeks, retired high school principal John Barbero, 63, of Roscoe in Washington County, watched his investment portfolio take a steep nosedive.
"It's been ugly," he said.
Barbero, who works part time as the public address announcer for the Pittsburgh Penguins, said he's fortunate to have enough invested in a well-balanced plan to absorb the hit. However, he said some of his friends might be considering a return to the work force.
A survey by the Transamerica Center for Retirement Studies found that some older workers are putting off retirement dates, cutting back on payroll deductions to retirement accounts and borrowing from retirement savings to offset higher living expenses for food, energy, credit cards and mortgages. The survey found that 60 percent of the full-time workers questioned said they believe they can work until they are 65 and still not have saved enough to retire.
"In past years, our annual retirement study has found that people often face competing financial priorities that prevent them from saving more for retirement, but the economic climate this year is noticeably worse," Catherine Collinson, the center's market and trend expert, said when announcing the findings.
Experts say some retirees save enough but put their money in the wrong places.
Laitner said the most common mistake among retirees is failure to diversify financial holdings, putting their money and their future at greater risk. Perhaps the biggest mistakes are committed by people who invest their savings with their employer, he said.
Although they feel comfortable with their employer, investing in company stock leaves no safety net if the company fails, he said.
"They are vulnerable," Laitner said. "They can take a huge loss at a time like this."
Rick Lofstead, 60, of Richeyville in Washington County, retired in 2005 after a teaching career in the Central Greene School District. In retirement, he and his wife, Pam, are relying on pensions and other investments tied to financial markets.
They take frequent camping trips and other vacations. However, he logs onto the Internet regularly for news about the country's financial picture because he worries about the effect it will have on his retirement accounts.
"If the stock market would calm down, I'd be a whole lot happier. I've been keeping my eye on it," Lofstead said. "I have no idea whether it will affect my monthly check down the road."
Although some investors are taking the bear market in stride, not everyone feels safe these days, experts say.
Steve Kutlenios, a certified financial planner and chartered financial analyst who is a vice president with Allegheny Financial Group in Pittsburgh, said how investors cope with bleak financial news often depends upon an individual client's temperament.
"We try to calm their fears by telling them to look at history," Kutlenios said. "It is bad, I know, because I've been doing this for 28 years and have been through it before. But our economy has recovered."
Kutlenios said he recommends that clients who are in the withdrawal stage of their retirement plan take out money conservatively, at a rate of 4 to 6 percent a year, to preserve the principal of their holdings. He said those clients should maintain about five years' income in bonds, rather than stocks, so that they could recoup losses if there is a protracted downturn in the market.
More than anything, diversifying to minimize risk and developing a sound investment strategy with a financial planner are critical, he said.
"You have to be able to sleep at night," he said. "It's a very individual thing. You have to determine how much volatility you can take."
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