LS: Grand Valley residents keep close eye on nest eggs
“Saturday Night Live” may not seem like a source for financial advice, but Bill Haggerty said a comedy skit he saw on the NBC show several years ago offered a tip that would help many Americans during today’s economic uncertainty.
In the skit, actor Steve Martin is in an infomercial touting a book titled “Don’t Buy What You Can’t Afford.”
That advice still holds true.
“As a nation, we have forgotten to live within our means,” said Haggerty, an independent financial analyst with Primerica Financial Services in Grand Junction.
In recent days, Haggerty has spoken to Grand Valley retirees and poised-to-retire residents concerned about the state of their retirement funds.
The economic flux has possibly postponed retirement for some residents who have watched the value of their assets shrink. Other residents think there is nothing they can do but hold steady and see what happens.
“The hardest-hit group is people in retirement now who are spending their retirement funds to live,” Haggerty said.
Ralph D’Andrea, 58, planned to retire fully next year.
The full-time geologist and occasional election and computer consultant has saved money in a Simplified Employee Pension Plan (SEPP) for 15 years and has invested and saved for retirement since he started working full time at 22, he said.
But given the current economic situation, his retirement date may have to change.
“Maybe I can pick up a few more consulting jobs and work part-time,” D’Andrea said.
He recently moved half his retirement fund from the volatile stock market into bank certificates of deposit, or CDs, with an interest rate of 3.5 percent.
The move was too late to preserve his entire retirement fund, but “the last thing I wanted to do is lose what I started with,” he said.
He left the other half of his retirement fund in the stock market, which is more lucrative, but higher-risk.
D’Andrea has grown tired of the “roller coaster” ride owning stocks can offer.
“Of course, you do have concerns when you lose $1,000 a day, but it’s not really money, anyway,” said Bob Wilson, 75, who retired in 1993 as a pharmaceutical salesman for Pfizer.
It’s paper until you sell it, he said.
Wilson has retirement from Pfizer — “it’s not extravagant” — and an IRA (Individual Retirement Account). The valuation on the IRA has gone down quite a bit, but Wilson said he’s not worried about it. It’s in the market long term.
“I may make some changes with it when the market stabilizes ... I think it will come back,” Wilson said.
Those people who jump at every market point every day, “they are wasting their time,” he said. Now is the time to “hold steady” not yank assets around.
“I’d like to see things stabilize ... we could go into a severe depression. But you know it was greed that got us there,” Wilson said.
“I just kind of get angry that there weren’t more rules and regulations against those mortgage bankers,” he said of sub-prime lending.
People were given loans and “they knew they couldn’t pay them back,” Wilson said.
Irresponsible lending and spending has other people of retirement age angered.
“I’ve got no sympathy for people who charge more than they can afford,” said Greg Gnesios, 61, of Grand Junction.
When Gnesios was given shares of Bank of America stock as a gift from his father several years ago, they were worth $10,000.
Their worth has since fallen as low as $4,000 and rebounded to $6,000 a share, last he checked.
“If it had been my money, I would have been apoplectic, but it was a gift,” Gnesios said.
Watching those three shares tumble is as close as Gnesios has come to the stock market in recent years.
Gnesios retired four years ago after a combined 32 years with the National Park Service and the Bureau of Land Management.
He receives a monthly pension check from the U.S. government. His family lives on that pension and the checks his wife, Amy Gibbs, brings home from her part-time job with School District 51.
Gnesios has a mortgage. He is saving for his daughter Lindsay’s college education, but he has not touched the retirement fund he set aside while working with the National Park Service. He hasn’t had to and doesn’t want to.
“We don’t buy a lot of stuff we don’t need,” Gnesios said. “You have to look at your life and ask, ‘What do you need?’ I need to hike and go out and enjoy myself.”
The family’s computer is old. They don’t own flat-screen televisions or iPods. When Gnesios’ car was vandalized, the family adjusted their monthly budget to pay $300 to replace the windshield.
Gnesios has friends who aren’t as fortunate. He has a childhood friend his same age without a retirement fund. He’s got a friend in Pagosa Springs of similar age working a full-time job to make ends meet.
“When I was young I got a job and ended up staying with it and ended up with good benefits,” Gnesios said. “There are a lot of people I worked with who are aging baby boomers making it more difficult than it needed to be.”
It goes back to the point Haggerty saw in the “Saturday Night Live” skit.
“Don’t buy things you can’t afford,” Haggerty said. “It’s so simple and no one does it.”
But for those who want to retire soon, time is not on their side when the market goes down.
“They really need to consult their financial advisers and see where their money is invested,” Haggerty said.
D’Andrea talked to his financial adviser Tuesday afternoon about lower-risk options for half his retirement fund.
“If something changes between now and the end of the year, I’m back in (the stock market),” D’Andrea said. “I’m riding it out with half my money still at risk and some safe.”
Haggerty said the healthiest retirement fund is a diversified one where individual investors aren’t counting on one stock to succeed.