Staying Fit
Background
In today's world of do-it-yourself retirement, stocks, bonds, mutual funds, and other investment products have become important components of a person's retirement assets. For this reason, the retirement security of Americans may be one of the greatest casualties of the financial crisis. The financial meltdown that this country experienced wiped out an estimated $2 trillion in retirement savings in just 15 months' time. The dwindling of retirement assets, which amounted to about a 20-percent overall decline, has come at a time when many people, including older voters, are grappling with more credit-card debt, declining home values, and reduced access to loans.
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In addition, an estimated 5 million older Americans become victims of financial fraud and abuse each year. In part, this reflects the fact that nearly one-third of all U.S. investors is between 50 and 64 years of age. Moreover, the transition from work to retirement is a particularly vulnerable time, as individuals must switch from a strategy based on accumulating assets for future retirement to one of investing for income during retirement. When thieves and con artists defraud or take advantage of these older investors, the results are particularly devastating. Such victims are generally beyond or near the end of their earning years. Thus, older people have little or no ability to rebuild their retirement funds.
At the same time, although older households long have been considered among the most frugal and resistant to consumer debt, changing economic conditions—particularly declining pension and investment income and rising costs for basic expenses, such as prescription drugs, health care, and utilities—have forced many older consumers to rely on credit and financing to make ends meet. Research further suggests that older adults consistently borrow at higher rates and pay more fees for financial products, including home-equity loans, auto loans, credit cards, and mortgages. Increasingly, too, such abusive practices as payday loans and overdraft fees harm the financial health of older consumers.