Stock Market Gains From Past Three Years Wiped Out

Many retirement savers now have approximately the same balance they had in 2005.

By SHARE

The financial turbulence of the past year has swallowed the gains from the 2005 to 2007 stock market boom for the typical investor approaching retirement age. Today, those age 50 and older with a retirement account have around $89,300, down from a high of $105,800 last year, according to calculations by Richard Johnson, Mauricio Soto, and Sheila Zedlewski of the Urban Institute.

Median Retirement Account Accumulation for Households Ages 50 and Older:

  • 2004: $80,900
  • 2005: $88,300
  • 2006: $93,300
  • 2007: $105,800
  • 2008: $89,300
  • Source: Urban Institute calculations, 2008 Note: Estimates are for September 30 of each year, expressed in constant 2008 dollars. The calculations assume households hold a portfolio of 50 percent stocks and 50 percent in fixed-income instruments and rebalance portfolios at the end of the third quarter of each year to the 50-50 allocation.

    "Middle-income boomers counted on the retirement accounts and the high values of their homes.... Today, their retirement account balances are significantly lower, home values keep declining, and employers don't seem too thrilled about hiring," says Soto. "These are the kind of changes boomers didn't want to happen right before their retirement."