No. of Recommendations: 6
In the "Your Money" section of the NY Times, there's yet another story about stock brokers investing retiree's money inappropriately during the tech boom, causing massive losses and shattering their hopes of retirement.

The author starts out with a story of a couple who took early retirement at the age of 57 from a $40k/yr job with $386k in liquid assets. Their claim (which the arbitrators believed) was that preserving their asset value was their directive to the broker. They lost 65% of assets when the tech boom collapsed and went to arbitration to get their money back. They blame the broker for investing too aggressively, even though they apparently expected to live comfortably and be millionaires in a few years based on investment gains.

The next story has a couple where the husband was making $80k/year at the age of 60 investing $310k, and expecting to retire.

Finally, a woman at the age of 50 making $40k/year invested $410k, also expecting a comfortable retirement off her investments.

At this point, I had to stop and wonder. Are these people (the retirees) greedy or just plain ignorant? Or did they expect to die early, because all the numbers just seemed wrong.

I suppose it was part of the mindset back in 2000, but I still don't believe how anyone realistically thought that a conservative investment portfolio would yield enough income for people in those salary ranges and age to retire. Judging by their available liquid asset, their cash expense levels were probably considerable. You'd have to be greedy, which I think most people were by the end of the dot-com runup, or just plain ignorant of the basic realities of retirement.

The real answer, of course, is buried deep within the article, which spends most of its time bashing the stock brokers.

"While it may seem surprising that people would consider retiring with relatively small amounts saved, Ms. Roper of the Consumer Federation said, "Americans tend to have very unrealistic expectations about when they can retire."

Mr. Zamansky (lawyer for couple in sad-story #1) said that such horror stories show how important it is for investors to know all their options. "These cases show the real need for investor education which would help people like these protect themselves against unscrupulous brokers," he said. "

From where I sit, the hard truth is this. The stock brokers went after people who were greedy, told them what they wanted to believe, and then took them for a ride. People want a cushy retirement, and they knew they couldn't afford it based on the money they'd actually saved. But the dream was still there. So when some well-dressed person came along with a big smile telling them that they CAN afford it, they wanted to believe.

The same is true for people who want to own luxury cars, vacation timeshares, big houses, etc.... While we can punish the stock brokers who pulled the con-artist routine on these retiree-wannabe's, it really doesn't change the fact that people fall for con's for very basic reasons. They're greedy, or ignorant.

We can try to fix the latter, but there's no real cure for greed. There are no magic solutions to the retirement question. Like the REHP site says : save money, reduce expenses, and invest carefully.

Beware the person who tells you there's a shortcut... there are none.
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