Baby boomers who became millionaires during the advent of the 21st century had looked forward to early retirement even though they were only in their late 40's and early 50's. But those plans have been blown to dust by the financial storm sweeping the country… the worst man-made disaster of our lifetimes.
Their stock options are underwater and their retirement accounts are cut in half at the same time they're saddled with jumbo mortgages. In the San Francisco area, their multimillion dollar homes scattered among the bright green hills can't be sold because most of the buyers are downsizing. Reluctant to downsize, even though their 5000 square foot super-sized "Mac Mansions" are ridiculously spacious for two people, they' re determined to hunker down and wait out the storm.
Retirement in Maui, Aspen or La Jolla seems a distant dream. If the downturn continues and housing values and stocks rot, retirement will become even more difficult. Mark Robinson, 50, Sr. Vice President at Colliers said, "business has never been so slow in my 20 years in the industry… and I planned to retire this year." But he expects the recession to pass relatively quickly. His younger work mates also seem to have the attitude to hunker down and wait it out. Few are old enough to remember the deep recession of 1982.
Ben Hull, 50, ex-Microsoft director and independent consultant explained, "I lost 30 percent of my portfolio but I still have some cash and I'm going to invest along side Warren Buffet." Mr. Hull believes that the Dow will stay above 8000 and the market will rally due to interest cuts, fiscal programs and a new proactive Administration. He remembers the 1982 recession but he is counting on a sharp, sweet recession that recovers in several months… not years. Mr. Hull's youngest is a year away from college and he hopes to downsize soon and retire in a warmer climate like Hawaii.
Ken Lloyd, 47, Vice President at Morgan Stanley said, "I never imagined a financial Armageddon would happen in my lifetime and I think the forces of evil are winning." He recently bought his retirement home, a 100 year old Craftsman, in San Diego and wonders how he's going to pay for it. He ponders out loud how many companies will approach flat-line before it's all over. In a protracted recession only the companies with strong brands and lots of cash on their balance sheets will have sustainability.
Some experts believe that there is a 20-25 percent decrease in the stock market left to go. The government can cut interest rates and spend money on bailouts and stimulus packages but at what point do they stop. The financial crisis could spread to the nation's balance sheet. People could lose confidence in the Administration because they are worried about the size of the debt and how the money is being spent. This could cause a further cut back in consumer spending which will hurt industry and induce another round of layoffs.
If unemployment spikes and clobbers white collar workers in places like Silicon Valley; foreclosures will spread to more affluent areas and this time it could be the newly minted millionaires contemplating their futures. Retirement could be the last of their worries.
Source: http://www.ArticlePros.com/author.php?Larryburke
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