Zvi Bodie Comments in MarketWatch on Nation's $2.1 Trillion Retirement Savings Shrinkage
"People being exposed to risk they're not even aware of," Bodie warns
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Zvi Bodie |
For an article about the extensive losses Americans have recently seen in their retirement savings, MarketWatch contacts Zvi Bodie, the Norman and Adele Barron Professor of Management at Boston University. They report,
The destructive effects of the financial crisis may be waning, but your retirement account won't soon forget. Savers lost 40% or more in the downturn -- a collective $2.1 trillion disappeared from 401(k) and IRA assets in 2008 alone -- and while the recent stock-market recovery may feel good, it's done little to stem a mounting crisis in the retirement system in the United States….
"People are being exposed to risk that they're not even aware of and they're being told don't worry about it; as long as it's far in the future everything will be all right," said Zvi Bodie, professor of finance at Boston University's School of Management and co-author of the book "Worry-Free Investing."
"That's complete nonsense," he said. What matters, he said, is the risk that on the day you need the money your investments have tanked....A huge amount of risk is being put on individual's shoulders. Bodie says 401(k)s are fine as long as savers invest the right way -- for Bodie that means not putting essential assets at risk in the stock market.
His choice for retirement plans: Treasury Inflation Protected Securities. "What anybody wants," Bodie said, "is a supplement to their Social Security benefits -- something that is protected against inflation, is guaranteed for life, and doesn't have the same political risk as Social Security." See Bodie's site at www.zvibodie.com.
From the article "Retirement? Good luck with that,” by Andrea Coombes, MarketWatch, September 23, 2009
