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Week of 2.27.09

Retirement at Risk

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In this struggling economy, boomers are rightfully worried about the funds they were counting on to carry them through the rest of their lives. Will they be able to afford their own retirement?

NOW turns to two experts for help and insight: Amy Domini, a pioneer in the field of socially responsible investing; and journalist Dan Gross, who covers the economy for Slate and Newsweek.

Read an excerpt from Daniel Gross' new book: "Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation"

Related Links

Amy Domini Bio

Daniel Gross Bio

Articles by Daniel Gross:

Newsweek: Tax Cuts Won't Work, Decline? I'll Decline, Yes, We Can

Slate: The It-Sucks-To-Be-Me Generation

Viewer Comments

Commenter: Peter
A totally useless discussion with participants who have no recommendation for what you should do now and who believe that Washington has some magic plan for recovery.

Commenter: john smith
i love your station.

Commenter: Robert
My parents grew up during the "big" depression. My father fought in WWII in Europe. I, and my siblings were told not to complain, eat our food because there were kids in Europe who were starving. Upon graduation from high school, we either went to college, learned a trade, or joined the service. We told our kids they had to work for what they wanted, although we helped them as much as we could, especially if it was related to education or training. They both joined the service and learned the foundations for their current jobs. They are doing fine today. They both coddled and spoiled their children who have demanded and received just about every toy, electronic device and automobile they sought. Should we be surprised at today's economic situation?

Commenter: Jo
Exactly. Where is the embarrassment?
And why are these institutions being allowed to retain the status quo?
Failure does not get rewarded.
I would like to know when the trillions on the sidelines are going to get invested.
Thank you for a great show!

Commenter: jan
I'll just say that I don't find Domini's idea of retirement (that I should move into a commune with a bunch of strangers or friends and sit around waiting to see who survives the longest?) to be adequate. Talk about intrusion and loss of privacy and potential for abuse... I also don't think it will happen.

A far more likely scenario. Back in the 60s when an elderly neighbor became ill and died. Her handicapped son wandered out in the snow, possibly looking for help and died from exposure. The mailman notified people when no one picked up their mail for a couple of days.

Commenter: Paul
Daniel says babyboomers will get what they want. But the country is a debtor nation now and we are collectively broke. So where will this money come from?

Commenter: Maria Arthur
My heart goes out to all the working people that are caught in this vortex. There are some caveats however in this. One, some people never have learned to safe. I was almost caught up in this dilemma and learned during the dot com. I had to semi-retire at the beginning of this year. Was able to do it because I was lucky and prudent. I thank FDR for Social Security

Commenter: charlie thomas
Amy Domini's comments were among the very few truly insightful economic / financial analysis of our current situation.

Still she does not address the disconnect between human social wants and the planet's actual carrying capacity.

very interesting show

Commenter: Mike Levelchek
Hasn't most of the bailout money gone to foreign governments and dictators? I haven't met anyone that purchased a credit default swap.

Commenter: sallie hancock
My retirement money is in Vanguard mutual funds. Like everyone, I've lost alot. I am unemployed and trying to figure out if I should withdraw the amount in equities and stick it in short term CDs.

The predictions for this year (among friends) is another 20% (at least) drop in equities markets.

I have a daughter going college in less than two years. My plan has always been to sell my house using part for her education and part for my new (and less nice) house.

I have enough in cash to last me two years.

Should I stay the course in my equity funds?

Commenter: Ellen Dibble
Summer 2007 I expected a bubble burst and switched one of three retirement accounts to the "socially responsible" option, hoping that the managers would put a viable future for the planet above immediate profit, so I was not surprised when it sank while the diversified stocks soared. I had hoped AARP and such would have a vigorous discussion on the nature of "responsible" investing. Amy Domini didn't get into that too mcuh. Maybe another day. Currently I am disgruntled that my socially responsible account has declined as much as the diversified account. Only the guaranteed account in TIAA-CREF is steady.
My question is: I decided to convert the sunken stock account to a Roth IRA (the socially responsible account is a Roth IRA already), thus paying taxes on a lesser amount now but allowing myself to a least not pay taxes on it down the road. I am well situated to earn more as I grow into the retirement years so this works. TIAA-CREF is eager to get me to sign off on that, and I'm thinking the nation's tax take would be higher this year if everyone did the same.
I said to a TIAA/CREF representative that I should wait till they offload their bank stocks, and I guess Citibank is one down, four to go. But another factor is Obama had said he would not tax senior citizens earning below I think $50,000, and I'd like that spelled out before I proceed.
I am 62, hoping to start saving more aggressively after I stop paying close to a thousand dollars a month between health insurance, long-term care insurance, and medical costs that are not covered, once Medicare kicks in. Again, I have to get healthier as I age, and this will work if I can start enlisting the help of younger people to participate in my business, so I have moved lately from a one-room place to three rooms, adaptable for accommodating a nurse if I am really sick, or relatives in fiscal distress, or a couple of work stations for assistants.
I would remark that in my 62 years the USA has never produced the kind of auto I want -- a roadworthy sort of golfcart, slow but able to get to a Zipcar station or bus terminal if need be. Nor has the USA been putting up housing I would move to -- economical muti-unit open-housing (other than "affordable," which is effectively a 30 percent tax, with no equity accruing; those of us who want equity in say windmills instead and want democratic style group housing and responsive landlords have been seeing our units converted out of our lifestyle since about 1972). In moving, I moved across the hall. My old apartment now houses a young lady who is an ad hoc assistant. (Wow.)
Another alternative, which reminds me of what Amy Domini was alluding to, "cooperative living," came up when I spied an ad for a house that had been both one family and two, with a third-floor apartment for an aunt, or in my case, for an older sister. A sibling and her husband, when they retire, having put their 3 boys through college on the salaries of a high school teacher and preschool teacher, could use an extra income while they find their sealegs in an underfinanced retirement. I asked the realtors selling the home I identified as satisfactory to all three of us whether other people were looking for such accommodations, and they said no but they expected more would think of it.
Sorry to be so long-winded, but you certainly struck a lot of chords with me. Here is one babyboomer ready to roll for sure.
I hope if I am right about time is ripe for converting to Roth IRA's, that you will remind people. I look forward to the bottom. Every dollar lost is a dollar saved when I think of my tax bill for the conversion.

Commenter: Stanford Schneider
Unfortunately, I got very little from this show, other than stocks may recover, and that mutual funds and certain bond markets are relatively "safe" investments, but nothing really about 401k's--Keep them or invest on one's own? What about chance's of recovering one's money, or how much to expect to lose? While I know there are multiple variables, SOME type of relevant information would have been helpful. How much should one have in one's "portfolio" to last 30 years? The only thing the program provided was that things will probably get better, but I tuned in to find out something more concrete from that.

Commenter: wade jones
I'm a social scientist, not a pro but really good with what I have learned. I learned enough when a teenager that the Soviet Union would collapse under it's own weight and corruption and predicted we would also. I don't know much about everyday things like buying a house but years back someone suggested that I get a house via sub prime. I couldn't believe what I was hearing. I knew it could not work, I had no idea it could be so big a financial. The end is that our market place is one big Roman orgy, not an economy.Not very attractive to those of us looking for something that actually works. I said as soon as the White House blurted out that no one saw it coming that lots of people saw it coming and now they are coming out of the wood work. But no major campaign to bring them to justice.That's wrong. I believe in an iron fist if need be. The govt can work as banker, it just has to have the right party and rules that create a cyclical audit. And keep Barney Frank out,he has no excuse concerning Freddy Mac and Fannie May. I knew it was headed for trouble years ago watching public broadcast. I remember Santa Cruz years back could not tell up from down over county money. They hired an outside contractor to audit on a percentage deal and the contractor did very well, both for themselves and the county. It was many millions. Thing is that certain leaders don't want to be exposed for failure. I would, if Obama, right off the bat hire an outside contractor and test them on such an idea. They should have to do training of govt people as they go, for free. I like the bonus system. The better they do the better the pay. I don't mind contracting out if it helps. The thing about using outside help for this particular thing is that they avoid all the employees for the most part. I would like to say one other thing. The NSA and CIA play a lot of games many of which include how to destabilize an economy. We educated types know that they have know about all this for some time. So who do they work for? Thanks

Retirement at Risk

Book Excerpt: "Dumb Money"

Retirement, Interrupted: What to Do?

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