Market Fears


Sun City, Ariz. – When the stock market drops, Barbara Eylands worries. She estimates that as much as 80 percent of her life savings is in the stock market. This is the money that she uses to put food on the table or gas in the car.

“I’m just hoping it will go up again and I don’t outlive my money,” Eylands says.

With more than 40,000 people, Sun City is Arizona’s largest retirement community. And the financial downturn is affecting many of these seniors directly. For people like Eylands who are living off the proceeds of an IRA or 401(k) that is invested the stock market, a market crash could be life changing. Eylands says she could always sell her house to raise money, but others aren’t so lucky.

“I’ve known people who’ve lost their pensions and they’ve had to go back to work,” says Lois Nelson, “and it’s not real easy for a senior to find a job.”

The rate of people 65 and older declaring bankruptcy has more than doubled since 1991, according to the AARP. And the rate could increase even more if the stock market doesn’t quickly recover.

Both presidential candidates have unveiled economic proposal in the last few days that they say will help seniors. Barack Obama would allow penalty-free withdraws of 15 percent or up to $10,000 from retirement accounts. John McCain would allow $50,000 to be withdrawn from retirement accounts, but with a 10 percent tax. Currently withdraws from IRAs and 401(k)s are taxed as regular income.

Eylands says that McCain’s plan would help her more than Obama’s proposal. She intends to vote for the Arizona senator next month.

Is Eylands making the right decision? What do you think needs to be done for our seniors? Watch the video above and please share your opinions below.

By Travis Fox  |  October 16, 2008; 2:57 AM ET  | Category:  In-Depth
Previous: Stuck in Blythe, Calif. | Next: Going to Bed Hungry

Comments



If you are asking if Eylands if making the right choice backing McCain, the answers is obviously no. If you are asking if she is interpreting the two proposals correctly, she must be over 65 to live in Sun City and sees no benefit from Obama's plan. But we don't know her tax bracket so can't judge whether McCain's proposal helps her.

Posted by: tucvares | October 16, 2008 12:09 PM | Report abuse

I guess that's why financial advisers tell us to move out of volatile investments into secure, albeit lower return, vehicles as we approach retirement. 80% in the stock market is (obviously) way volatile...

Posted by: opinionated5 | October 16, 2008 12:12 PM | Report abuse

It would be interesting to better understand her investments as the article implies she has 80% of her savings in stocks. At her age, no decent financial advisor would make recommendation; most should be in bonds or other fixed income assets. Given McCain's previous backing of policies which led us to this point can't imagine why she's voting for him.

And the largest retirement community in the US is The Villages, Florida with over 70,000 residents, not Sun City.

Posted by: stevetunley | October 16, 2008 12:24 PM | Report abuse

Can you say Reverse Mortgage...
Let your IRA's sit and recover all the while utililzing the tax free cash in your house....

Posted by: davemichelle07 | October 16, 2008 12:28 PM | Report abuse

Sun City, Arizona, with 40,000 population Is NOT the largest retirement community in U.S. TRY The Villages, Florida with 70,000
retirees!!!

Posted by: xerxes5 | October 16, 2008 12:38 PM | Report abuse

The government ought to at least suspend the Minimum Required Distribution. Currently a taxpayer who turns 70 and 1/2 in a given year is required to take out from their retirement funds including IRAs o/t Roth the MRD or face Draconian tax penalties, 50%.

Thus the person who is withdrawing currently could take the advice above and use a reverse mortgage instead.

Posted by: amacarthur21 | October 16, 2008 12:43 PM | Report abuse

The struggling Americans that are being forced into bankruptcy are now having a tremendously difficult time - THANKS TO PLAGIARIST-JOE BIDEN (aka Senator Botox, aka Senator Hair-Plugs, etc.).

In 2005, plagiarist-joe biden helped pass a controversial bankruptcy bill through the Senate. The bill, which made obtaining debt relief after a bankruptcy more difficult, passed the Senate by a vote of 74-25. During the years that plagiarist-joe was helping the credit card industry win passage of a law making it harder for consumers to file for bankruptcy protection, his son received more than $400,000 in consulting fees from credit card issue and key proponent of the bill, MBNA, which is headquartered in plagiarist-joe's state. Plagiarist-joe was one of the first Democratic leaders to support the bankruptcy bill, and he voted for it four times – in 1998, 2000, 2001 and in March 2005, when its final version passed the Senate. This wasn't the first time Congress had passed this shameful act. Bill Clinton vetoed it twice in the 90's, so we know where he stands. The credit industry, ever relentless, kept coming back, confidant they had the number of elected officials necessary to do their bidding. They did, and plagiarist-joe was always one of them.

Radical loony-left advocate Arianna Huffington wrote on salon.com in March 2005 that this legislation was "so hostile to ordinary American families that it could only have come about in a place as corrupt, cynical and unmoored from reality as Washington, D.C." She concluded: "The bankruptcy bill is morally bankrupt. And so is any senator who votes for it." She defined the problem:

"So what does the bill do? It makes it harder for average people to file for bankruptcy protection; it makes it easier for landlords to evict a bankrupt tenant; it endangers child-support payments by giving a wider array of creditors a shot at post-bankruptcy income; it allows millionaires to shield an unlimited amount of equity in homes and asset-protection trusts; it makes it more difficult for small businesses to reorganize while opening new loopholes for the Enrons of the world; it allows creditors to provide misleading information; and it does nothing to rein in lending abuses...."

Plagiarist-joe: a 30+-year politics-as-usual Beltway parasite who is the poster-boy for all that is rotten in Washington and who thinks RAISING TAXES IS PATRIOTIC!

Posted by: ImpeachNOW | October 16, 2008 1:28 PM | Report abuse

What can be done to help seniors? The recent increase in social security is a start. But now that so many seniors are poor, there are some other things which could be done.

1. Create a higher interest rate saving system for seniors so that their money can be safe and they won't have to put it in the market in order to keep up with inflation.

2. Seniors need help staying in their homes. There should be
property tax breaks for seniors, and, for extreme cases, utility breaks.

3. Create a healthcare system which pays enough so that seniors don't get into debt trying to pay doctor/hospital bills.

4. Stop taxing social security benefits.

I'm sure there are others who can add to this list.

Posted by: Think2 | October 16, 2008 1:46 PM | Report abuse

Lets see:

$15,000 out an no penalty + another $35,000 (her tax bracket which probably is not over 20% and more like 10-15 as Soc Sec does not count if income s below a certain level) = call it 15% on her tax rate. $50,000 - 5250 in taxes = 44,750

$50000- (50K x 10%) = 45,000.

If thsi woman needs to pull out $50,000 to pay her bills, then she DOES need to get a job even if it is only babysitting or sell the house and downsize or stop spending so much money!

She is way off on the math.

Posted by: eabpmn | October 17, 2008 5:20 PM | Report abuse

market fears, hard times you say. well obama is actively planning on plunging the usa DEEP into debt. everyone please spread this message:

joe the plumber helped obama define his socialist economic policy .. but obama has much more going on than 'spreading the wealth around' just in america. last summer senator obama introduced the 'the global poverty act' to congress, which has been passed in the house and currently awaits approval in the senate. the global poverty act is a tax of 0.7% of the american gdp (gross domestic product), to be given to the united nations and distributed to third world countries in an attempt to eradicate 50% of the world's poverty. virtually no one knows about this, and yet it will cost americans 845 billion dollars over the next 13 years. what kind of insane agenda for our economy is obama working on? (let it be noted this has nothing to do with the recent 700+ billion dollar subprime bailout .. these are two totally separate activities.)

topics in this easy read include joe the plumber, the debate, socialism and finally the the global poverty act, which the heritage foundation calls "superfluous, misguided, and dangerous". check it out here:

http://make-informed-decisions.blogspot.com/2008/10/joe-plumber-helps-obama-define.html

Posted by: guesswhosreadytolead | October 17, 2008 9:02 PM | Report abuse

All of these comments on the financial catastrophe that is now occurring and what the solution(s) should be.....If you are going to offer a solution, then you should first determine the true problem. If you offer a solution before the problem discovery process is complete, you can not offer a viable solution. Let us start in the beginning.....This is a FINANCIAL CRISIS that we are facing that involves our economy and MONEY AND BANKING. Hello......Is anyone listening?? The problem is THE FEDERAL RESERVE SYSTEM, AND ITS' AFFILIATION WITH THE WORLD BANK. The solution is that THE FED MUST BE ABOLISHED. WE MUST PASS A CONSTITUTIONAL AMENDMENT TO GET RID OF THE FED, GO BACK ON THE GOLD STANDARD, AND ADD A CLAUSE (THAT IS IRREVOCABLE) THAT WILL NEVER, EVER ALLOW A CENTRAL BANK OR FIAT SYSTEM TO CONTROL OUR MONETARY SYSTEM.

Posted by: dhashjr | October 18, 2008 7:10 AM | Report abuse

Can anyone say "Darwinism?". Can anyone say "Let's take care of our own country?".
I am so sick of the U.S. Government poking their noses, guns, aid and democracy into all other countries. What we need to do is fold up our military that is spread out all over the planet and put them to work here.
Stop giving financial aid to every country except ours. Really, if we acted like Switzerland, we would be able to take care of our own, rally our markets, make a sizable impact on illegal immigration thereby keeping terrorists from entering our nation, have monies to spend for research on renewable energies, should I go on?
We are about to face the biggest group of retired persons (baby boomers, and now those baby boomers are rethinking retirement because it does not make financial sense. We already have a sizable group that is retired and they are living longer because of all the new medical advancements.
We have too many people on the planet and when one species (homo-sapiens) grows too large, the planet will correct the problem by doing what it does best, restoring balance. We are the only species on the planet that has the smarts to fix these global problems, if we don't, I really don't want to see what mother nature does to correct the balance. We will most likely experience one or more extinction level event(s).
Act now before nature acts for us.

Posted by: WildChildinMagdalena | October 23, 2008 8:10 PM | Report abuse

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