|By Gary Pinnell, Highlands Today, Sebring, Fla.|
Since the Great Recession started in 2008, clients have been coming to
"Can I get my money back?" some have asked.
"Not without a substantial hit," replied DiNapoli, president of the company which invests money in 401(k) plans, IRAs, stocks, bonds and annuities. The federal government charges a 10 percent penalty for early distributions, and income taxes must be paid.
"But they have to have the money back," said DiNapoli, who is 50 himself. "Their house is being foreclosed, or they've got to feed their kids."
"They're blowing out their retirement savings," he added. "They're starting over, and they've only got so many good years left."
The Great Depression of the 1930s was a seismic shift in U.S. monetary markets, and its aftershocks were so disastrous, Americans lost faith in banks and stock markets.
"People hid their money under their mattresses and buried it in the back yard," DiNapoli said.
The effect is the same after the recession. Investors come and ask for DiNapoli's help. They want their money in certificates of deposit that earn less than 1 percent interest, and they'll risk bonds or annuities.
"But don't you dare put me in the stock market," DiNapoli said.
As a result of being out of the stock market for years, DiNapoli said, some investors may have escaped the fall of the Dow to 6,600 points in 2009, but now they're missing the rise to 14,000.
The stock market crash and bank failures at the end of Bush administration are just two events. Many employers ended company retirement plans in favor of 401(k) accounts. Then many employers stopped 401(k) contributions.
In 1999, 69 percent of employers offered retirement benefits to full-timers. Twenty years later, just 49 percent of Americans worked for an employer with a retirement plan, according to a new
Public sector employees are now the most likely to be offered a pension or 401(k) (81 percent) than workers in the private sector (49 percent).
The Great Recession consumed savings accounts. Hedgeye Risk Management says 1970s and 1980s savings were in the 5 to 7 percent range. In the decades since, personal savings have declined to the 1 to 3 percent range.
Minimum wages are up 21 percent since 1990, but the cost of living has increased 67 percent. The most dependable next egg, the family home, has declined in price by one-third since 2006
The dreadful truth about do-it-yourself 401(k) accounts -- managed by employees who have little or no experience in the stock market -- is that many fell more than 50 percent in recessionary years and still have not recovered, the
"The corporate world is a much more transient society," said DiNapoli, who has advised individual and business clients for 25 years.
The dream of retiring early has popped.
However, more than half of all workers say they intend to work longer than they would like in order to keep their health insurance at work, according to a
EBRI estimated that a 65-year-old couple, both with median drug expenses, would need set aside
DiNapoli places the blame on everyone: the government, banks, land speculators, mortgage lenders and individuals. Mortgage companies offered risky second mortgages, homeowners took the money and ran to buy boats and campers.
"A lot of damage has done that will take years to repair," DiNapoli said.
(c)2013 the Highlands Today (Sebring, Fla.)
Visit the Highlands Today (Sebring, Fla.) at www.highlandstoday.com
Distributed by MCT Information Services
|Source:||McClatchy-Tribune Information Services|