IT COULD HAPPEN TO YOU
John felt like someone had punched him in the gut.
As he watched the news from his kitchen table, he couldn’t believe what he was seeing.
He picked up his phone to call his financial advisor for a second time. Still busy. He left another voicemail.
He hopped online to try and figure out what was going on. Every news site said the same thing.
The financial markets had collapsed.
John saw something similar in the early 2000’s, when the dot com bubble burst and after 9/11, but this looked worse.
John called his financial advisor a third time. Nothing.
“When my portfolio took a 27% hit in 2000, I had time to make up for it. I’m 60 years old now and plan to retire in a few years. I don’t have time to get my money back if I take a big loss now. What am I going to do?” John thought.
John would describe himself as a diligent worker and saver. He has worked his entire career at a local newspaper, first as a writer and now an editor. He would be the first to tell you he didn’t do everything perfectly but did enough saving that he and his wife had just over a million dollars in their 401k retirement accounts.
The problem is that it was all tied to the market. During the housing market crash of 2008, anyone in the market got slaughtered.
John looked back at the TV to see if anything had changed, but things were only getting worse.
His wife, Sarah, had gotten out of bed and was moving sluggishly into the kitchen. Neither of them had slept well since the news broke, especially Sarah
She was consumed with dread at the thought of their retirement dreams being put on hold, or possibly crushed forever.
As she poured herself a cup of coffee, and handed one to John, she asked if he had heard anything from their advisor. “Nothing yet, but I’ll try him again,” John said.
John left his fifth message since the news about the market crash first broke.
“I’m sure everyone is trying to get a hold of him to figure out what the hell is going on and how their investments are doing. I’ll keep trying until I get a hold of him. We’ll figure this out,” he told Sarah.
Sarah and John planned to retire in two years. They already knew everything they were going to do, experiences they had put off for years.
John was going to get back into woodworking and had already bought some equipment to expand his skills. He was also going to write a novel he’d been noodling around with for years.
Sarah was looking forward to spending more time with their five grandkids, as she loved to take them on little trips and adventures. She also wanted to start gardening and help more at the church.
Both longed for an extended vacation to Europe, something they had talked about since they first got married. Italy, Spain, France and Germany - they wanted to see and do it all.
Now all of that was hanging in the balance as they waited to hear back from their advisor.
The phone rang. John picked it up frantically. “Hello?” he said, hoping it was his advisor, Tim.
It was him. “Hi John, sorry it’s taken me so long to get back to you. Things have been crazy around here. As you can imagine, we were completely blindsided by this. We’re just trying to make sense of which way is up or down right now,” Tim said.
“I understand,” John said, trying to stay calm. “But I really need to know what’s going on with our investments, since you help oversee our 401k’s and other investments. How bad is it?”
Tim paused for a moment to collect himself before answering “We’ll know more over the next couple of days, but it’s not looking good. Everyone is taking a hit, and it looks like you’re going to lose about $400,000. It could be more depending on what the market does over the next few days.”
John was in shock. He didn’t know what to say at first.
“What do we do? Should we get out? Do we stay in? How do we fix this?” he asked.
“Now wouldn’t be a good time to get out,” Tim said.
“This happens every so often, but the market always comes back. The best thing for you to do is to hold tight and remember it will eventually come back. Take a deep breath and wait till the dust settles.”
“How long are we supposed to wait?” John asked with a hint of frustration. “Sarah and I are a few years from retirement. Will it be back by then?”
“I can’t say for sure, John, but it’s probably going to take longer than that. The market rarely bounces back that quickly.”
John couldn’t believe what he just heard.
“So, we’re just supposed to just sit here and do nothing? Our entire life gets turned upside down, overnight, without any warning, and we’re supposed to sit here and hope for the best?” John said even more frustrated this time.
“Look, I’ll have more information soon, John. These things happen and always work themselves out. Just hold tight, and I’ll get back to you soon.” And Tim hung up.
John just stared at the phone
“What did he say?” Sarah asked.
John shared what Tim said and tears started to stream down her face. Their life, and plans for retirement, had been completely turned upside down.
When it was all said and done John and Sarah lost close to $500,000. It took them ten more years to get enough saved to retire. During this time John lost his job at the newspaper as the industry started to implode, so he had to take on a variety of odd jobs to keep paying the bills while saving for retirement.
He ended up working until he was 70 years old, 8 more years than he and Sarah planned.
The stress and sleepless nights brought on a number of health problems, leaving them unable to travel or do many active things before the crash.
They often think to themselves how close they were to having a completely different life.
Unfortunately, that’s how fast it can happen.
In one day, your entire life can change.