VISIONS OF SUGAR PLUMS :

Stocks' Slide Is Playing Havoc With Older Americans' Dreams (KATE ZERNIKE, 7/14/02, NY Times)

As the owners of an Atlanta advertising agency that billed $40 million a year, Jim and Jan Pringle were featured in a cover article in Inc. magazine asking, "What's the best time to retire?"

In January 2000, with the Dow well above 10,000, they were confident they had picked the right time. They took more than $2 million they had made from selling their company and bought stocks. Their broker encouraged them to take a month in Europe; instead they moved to South Carolina, where they began building a dream house on the beach.

The Pringles have since lost about 75 percent of their investment. Far from taking any trips to Europe, they have done what they vowed never to do: mortgaged their house and gone back to work.

"I thought I would at least be able to take a break and think about what to do with the second half of my life," Mr. Pringle, 63, said. "But I didn't have a lot of options when the market went south."

With all due respect to the Pringles, who are probably perfectly decent people, they behaved foolishly and have no one to blame but themselves. The time to crank money into stocks is not when you are in your mid-60s and looking to retire. That's when you play it safe. I'm sure someone else can do the math, but I think if you found an almost completely safe investment that had a really minimal return, thanks to the decreased risk, of say 2%, you'd get $40k a year and never touch a penny of your principal. Since at that age you've likely retired all your education debt and own your own home, you could live quite comfortably on that amount plus your Social security. I'm sorry these folks lost their nest egg, but perhaps they should
have done more to protect it? Posted by Orrin Judd at July 16, 2002 8:54 AM