More than 1 in 5 say retirement savings are worse now than before the Great Recession

As America marks the 10th anniversary of the end of the Great Recession in June, a new Bankrate survey  finds that more than 1 in 5 (22%) Americans who were adults when the recession started in December 2007 say their retirement savings are worse now than they were before it hit.

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“The echoes of the Great Recession remain very present in the financial lives of many Americans, despite the improvement in the broader economy,” said Mark Hamrick, senior economic analyst at Bankrate.com. “While some have managed to prosper in the decade since, there are still tens of millions who are struggling to even get back to where they were before the economy took a turn for the worse.”

At a time when the traditional economic data tells a story of booming growth and maximum employment why do more than 1 in 5 say retirement savings are worse now than before the Great Recession?

Hamrick talked with Fox Business to discuss why retirement savings are worse now than before the Great Recession.

Boomer:  If I am now retired where should I have my investments?  II am in my 60’s and still working, to avoid a loss if we have another recession, should I continue contributing to my 401K or should I be putting my savings elsewhere?

At a time when the traditional economic data tells a story of booming growth and maximum employment why do more than 1 in 5 say retirement savings are worse now than before the Great Recession?

Hamrick:  To both of these questions, we have to start with the fact that we don’t give specific investing advice at Bankrate. Among the reasons for this is that more information is needed to address specific situations or questions.

Our mission is to help people attain their financial goals by providing trusted and useful information. Still, there are some important considerations which can help you to begin the process of moving forward. If you believe you still have work to do regarding the best investment decisions, no matter whether you are just beginning a career, heading toward retirement or having stopped working, the first step is acknowledging that you have some homework to do.

Among the first things to consider:

-How much money are your currently investing and how much do you plan to invest or need to invest in the future to achieve your goals? What are your anticipated expenses such as mortgage payments or rent, health insurance costs, debt and money needed for other basic needs?

-What other sources of potential income do you envision? Is part-time work necessary or desired?

-A recession or downturn is ultimately inevitable. You still need to work toward your financial goals in any case. But you might also need to make some adjustments depending on previous investments or asset allocation decisions.

-Are you in good health? Americans are generally living longer these days. So, it isn’t unusual for someone to live 20 or 30 years (or longer) beyond the end of work. That means that you’ll still likely weather a number of market and economic or business cycles and the inevitable market volatility. For some, that might suggest that at least a portion of their savings or investments need to generate a return better than the rate of inflation as well as better than what cash can provide in a conservative or interest-bearing account.

-What is your risk tolerance? Can you stomach nerve-rattling downturns in the market from a psychological standpoint?

-Are you married or have a partner who is also dependent to a degree on your investments? Does that person have retirement benefits including a 401K and/or Social Security benefits?

-Do you know of a fee-only financial adviser or do you have a relationship with another reliable and trusted financial professional who can help you chart your future course? Many professionals are willing to engage in a free consultation to begin.

Boomer: At a time when the traditional economic data tells a story of booming growth and maximum employment why do more than 1 in 5 say retirement savings are worse now than before the Great Recession?

Hamrick:  My sense is that the depth and breadth of the virtual hole that was created by the financial crisis and Great Recession are generally underestimated.  Our survey found, for example, that of those with retirement savings at the start of the downturn, nearly 1-in-5 tapped into that money to some extent. That means they had ground to make up. Further, of those with emergency savings when the recession began, about 1-in-4 depleted that savings cushion entirely.

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It is important to remember that not all expansions and recessions are created equal. While the downturn was exceptionally severe, ultimately regarded as the worst since the Great Depression, there have been some less-than-stellar aspects of the expansion which has followed. While the duration of the expansion has been historic, wage gains have largely been less than substantial and sustained. 

Given that most Americans rely on income from work as a means to potentially improve their standard of living, the lack of better wage gains has hampered their recovery. While we don’t know when the next recession will begin exactly (and can’t know either its depth or length), it will likely erode the financial standing of many Americans once again through unemployment and losses in investments and income.