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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Lessons Learned in Recession Help Retirees Cope with Latest Selloff

Most retirees keep their cool during recent selloff and say the recession helped prepare them for latest downturn.

Confidence in the U.S. economy plunged in August, but the nation’s senior citizens appear less ruffled than most Americans by the most recent market turbulence. 

An August survey by Millionaire Corner found that more than 58 percent of retirees felt better or much better prepared for the market downturn of early August than they were for the financial upheaval of 2008. A smaller share, 53 percent, of working Americans felt more prepared for the recent selloff. 

“Investors typically shift to a more conservative portfolio as they near retirement,” said Catherine McBreen, president of Millionaire Corner. “Retirees’ high level of investor confidence may derive, in part, from this more defensive stance.” 

Lessons learned in the recession, and actions taken as a result of the recession also likely helped retirees weather the most recent downturn. Investors surveyed by Millionaire Corner in December said the recession has taught them valuable lessons, including that their house was not a stable financial asset and that they should take on less debt. The top three actions investors said they took in response to the recession were to save more, invest more and reduce debt. 

Nearly 57 percent of investors age 60 and older said their experiences from the market crisis of 2008 helped them cope with the latest downturn and they agreed with the statement “I wasn’t upset with the drop in stock prices.” 

Retirees were evenly divided over whether the downturn was a crisis or a normal change of stock prices, but more than 61 percent said the selloff was based more on emotion than on factual information. This perspective prompted nearly 24 percent of retirees to take advantage of the drop to buy additional stock, though 13 percent moved investments into less risky products, such as savings accounts, and nearly 5 percent sold some investments to buy gold. About 12 percent discussed options with their financial advisors, but more than 18 percent conducted independent research to help decide what to do.

 As a group, retirees appear to be more resilient than Americans as a whole. Fannie Mae’s National Housing Survey for August measured a year low in pessimism over personal finances and the economy. More than three-fourths of Americans (78 percent) said the economy is on the wrong track. More than one-fourth expected home prices to fall further and 22 percent expect their financial situation to worsen over the next year.