Market crash will affect Florida retirees
SARASOTA (AP) – Until the 2008 stock market crash, David and Priscilla Williams were planning on not spending many more cold winters in Philadelphia.
Two years ago, when real estate was still fetching a good price and stocks were riding high, the Williamses figured they were a mere 25 percent away from retirement, in terms of how much of a nest-egg they wanted to have.
“Now, it may take us five years to get back to where we were two years ago,” David Williams said.
During the boomers’ peaking earning years, it had become a standardized demographic truth that they were going to be the richest retirement generation ever, because those born between 1946 and 1964 spent their working years in prosperity, had turned their homes into piggy banks, and were inheriting a lot from their World War II-generation parents.
But in just a few years, that typecasting has been warped beyond recognition.
A severe recession, on top of the long-playing slump in real estate and a more abrupt bear market in stocks, threatens the ability of boomers to sit under the palm trees as soon as they might like.
The fate of boomers such as the Williamses will have profound implications for Florida, which is already seeing the traditionally steady stream of retirees that help fuel its economy pinched by competition from aggressive states in the South and Southwest.
The state could lose even more as the financial crisis prompts boomers to delay retirement or to go to places offering a cheaper cost of living or to simply stay put, experts say.
But others argue that the crisis might have a silver lining, prompting two-household boomers to pull the retirement trigger sooner, selling their northern home and keeping the one in Florida to trim expenses.
For boomers measuring their retirement prospects through the stock market, the last year has been “a catastrophe,” said StockSmart.com President Suzanne Cook, who tracks the data for a living. From October 2007 to now, U.S. stocks have lost nearly half their value, plunging from a market capitalization of $24 trillion to about $15 trillion.
“This money has literally vanished, and we are not through with this yet,” Cook said.
Getting their hands on that equity “was considered inevitable – that these boomers would retire to Florida or whatever, this money would be available to them, and they would have a certain lifestyle,” Cook said.
David Williams, whose tropical daydreams took him and his wife to a Mexican villa, said: “I walked around like a zombie for three, four weeks when this was crashing. I was waking up past midnight and looking at the overnight markets.”
The stock market drop comes on top of a vicious decline in residential real estate.