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Big Retirement Losses If The Market Crashes Tomorrow

FYI: It might not be a stock market crash -- conventionally crash mode is a 10% drop or more -- but it might feel like one. On Tuesday Dec. 4, the S&P 500 fell -3.24%. Based on estimates from Monique Morrissey of the Economic Policy Institute when one considers stock holding of $5.2T in 401(k)-type accounts and IRAs, the retirement savings for all Americans fell by $155 billion yesterday. About 55% of the 24 million older American workers, age 50-64, who had,generously, $100,000, their account balances fell by $1,620 in one day. That kind of hurts. If that goes on it can hurt more.

If the market falls like it did in 2008-2009, these 13 or so million older workers would lose over $20,000. And, they simply won’t have time to recover especially if a family member loses their job and they have to take Social Security early. As I have written before the morbid joke about the Great Recession was that it turned Americans’ 401(k)s into 201(k)s. Indeed, the nation’s 401(k)s and IRAs lost about $2.4 trillion in the final two quarters of 2008. In 2008, those aged 30-50 had a median return of -30%. Over half of people over age 60 with 401(k) and IRAs lost more than 20%, according to Hewlett.
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