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 Confidence
Soars as Markets Rebound
In
2004, the number of workers aged 45 and older who planned to postpone retirement
plummeted to just 13 percent, compared with 24 percent in 2003.1
That should be good news, right? Sure — until the next time the financial markets experience
volatility. Those same people may have to amend their plans yet again.
The date when you
plan to retire should hinge on factors related to your career, health, and
personal preferences. The real good news is that by putting a solid financial
strategy in place based on your situation and a long- term
outlook, you may be able to help insulate your retirement plans from the ups and
downs that the markets inevitably experience.
Three
Bears and Then Some
Assume that in December 1972, a $10,000 investment was made in stocks mirroring
the S&P 500, a broad measurement of U.S. stock market performance. In the 31
years that followed:2
1) Stocks endured
three bear markets.
2) The investment
value would have fallen to about $5,000 within the first two years and taken
until 1976 to recover the loss.
3) The investment
would have lost value during 149 out of 372 months.
4) The balance
would have grown to over $267,000 by the end of 2003, not including taxes or
sales charges — a 2,575 percent cumulative return.3
Often during this
period, an investor with a short-term outlook could have decided that stocks
were too risky. If instead the money had been placed in 30-day Treasury bills,
the ending balance would have been approximately $63,000 before taxes — about
$200,000 less than the stocks' ending balance.4
Remember that past performance is no guarantee of future results. And if you had
to sell stock at an inopportune time, your outcome could be very different.
It can be tough
to stay the course when the markets turn volatile. By investing for the long
term, you may be able to retire on your terms rather than waiting for conditions
to improve. Call us so we can help you retire on your own timetable.
1) 2004
Retirement Confidence Survey, Employee Benefit Research Institute
2-4) Wiesenberger, 2004. Performance described is for the period 12/31/1972 to
12/31/2003. Stocks are represented by the Standard & Poor's 500 Composite
Index (total return), which is generally considered representative of U.S.
stocks. Thirty-day Treasury bills are considered representative of
cash-equivalent investments. The return and principal value of stocks fluctuate
with changes in market conditions. Shares, when sold, may be worth more or less
than their original cost. Treasury bills are backed by the full faith and credit
of the U.S. government as to the timely payment of principal and interest. The
principal value will fluctuate with changes in market conditions. If not held to
maturity, T-bills may be worth more or less than their original value. The
performance of an unmanaged index is not indicative of the performance of any
particular investment. Individuals cannot invest directly in an index.
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