Losing Your Footing in the Shrinking Middle ClassAdam Gardiner
When the financial collapse hit in 2008, thousands of Americans lost their jobs and substantial portions of their IRAs. It was like having the rug pulled out from under them. Fortunately many have slowly but surely been able to regain their footing and return to a place financially that’s somewhere close to where they were before the collapse. But there also remains a good many who haven’t been able to recover, and despite years of perseverance, still teeter on the brink of financial ruin, struggling just to make ends meet.
The Story of Dan Jones
As reported in the Los Angeles Times, Dan Jones worked in marketing and engineering, making as much as $150,000 per year for such high profile companies as Samsung and Mitsubishi. He and his wife Suzanne had a substantial retirement fund and a house in Huntington Beach, CA. Then the economic crash hit, and Dan lost his job. At the same time plunging markets meant his 401(k) lost much of its value as well.
Jones did receive six months’ severance pay from his employer, and thought that would be enough to last them until he found a new job. Unfortunately, at fifty-nine years old, the opportunities simply weren’t there.
Most companies prefer to hire younger workers they hope will stay a long time. Job prospects become significantly more difficult for anyone over fifty, and continue to get slimmer with each passing year. Dan was highly qualified and great at what he did, but no matter how hard he looked, no one wanted to hire someone so close to retirement.
Eventually, Dan and Suzanne were forced to sell their home to keep the bills paid. But even that didn’t work out as well as they’d hoped. The housing collapse diminished their home’s value by over $200,000, forcing them to take a steep loss. Since then, they’ve cashed in their savings bonds and even resorted to pawning their few remaining valuables such as watches, cameras, and Suzanne’s wedding and engagement rings.
Networking to No Avail
In his attempt to find gainful employment, Dan’s applied for work at hundreds of companies, from other positions in his field to simple retail jobs, to no avail. In addition to going to job fairs and finding listings online, he joined a networking group, the purpose of which was supposed to be helping struggling managers and executives find new opportunities. Over time, the group has grown from a handful of people to over 1,000 members. This sounds like a good thing—until you realize that this means an increasing number of people are looking for work, and a decreasing number of people actually finding it.
Dan was nearing his retirement when the financial collapse hit. He and Suzanne were always responsible with their money and focused on growing Dan’s 401(k). By working just another six years or so, they could have lived comfortably for a long time to come. Unfortunately, that’s no longer in the cards—for them, or for a lot of other people in the same situation. The job market appears on the surface to be improving. However, things are still unstable, and if you’re 50+, you could easily find yourself out of a job, with no prospects for a new one and no way to keep from losing your nest egg in the meantime. It’s a cautionary tale that we need to protect our retirement investments against unexpected financial disasters, including volatile and uncertain markets.