Retirements Delayed by Losses, Survey Says
By JEFF SOMMER
February 17, 2002 Sunday NYT
Thirteen percent of investors polled recently said that they would have to delay retirement because of stock losses.
The impact was greatest for older people. More than 22 percent of respondents in the 55-to-64 age group said they would have to work longer. The proportion rose to one-fourth for those 65 and older.
International Communications Research conducted the survey from Dec. 14 to Dec. 18 for Quicken, the financial services unit of Intuit. It was based on a random sampling of 500 people who manage the investments in households with an income of more than $75,000 a year.
Almost one-third of the respondents said they had lost more than 25 percent of their savings for retirement since the market peak of March 2000. An additional 50 percent said they had lost up to 25 percent. Only 6 percent said the value of their retirement portfolios had increased.
Most people said they were adopting conservative tactics in response to losses, with forty-two percent saying they had "increased their cash positions."confidence cracking? max
About one-third used index funds or other methods to passively track the stock market and more than one-quarter expressed greater confidence in indexing than in active stock managers.
"Uncertain market conditions make it difficult for investors to know whose advice to follow," said Baie Netzer of Quicken.com. "That such a significant number of respondents are skeptical of the performance of actively managed portfolios suggests that many investors think there is limited opportunity for fund managers to beat the market."
A Call for Fund Vigilance
John C. Bogle, the founder of the Vanguard Group, says he believes that the mutual fund industry should become more active in ensuring that corporations are properly governed.
In a speech last week before the New York Society of Security Analysts, Mr. Bogle said, "The fund industry has helped to create the overheated financial environment of the recent era" and ought to solve some of the problems. He proposed the creation of a "Federation of Long- term Investors," with companies that run index mutual funds, like Vanguard, as its nucleus.
He said mutual funds had contributed to the making of a marketplace focused on short-term stock prices, not on the long- term creation of value for shareholders. A consequence, he said, is the "pervasive debasement of accounting standards," including the widespread use of pro forma earnings that are not easily decipherable by investors.
Mr. Bogle blamed a variety of groups for allowing corporate standards to flag, including the New York Stock Exchange, corporate directors, the Association for Investment Management and Research and securities analysts.
Home | Back to Business | Search | Help |
