Retirement Savers Respond to the Market Meltdown: Avoiding the “Hail Mary” Pass in Higher Education

Paul J. Yakoboski
Principal Research Fellow
TIAA-CREF Institute

September 2009 |

The magnitudes of the recession and drops in financial markets over the past year-plus have been an unprecedented experience for current workers. It is natural and advisable for retirement savers, especially those nearing retirement age, to review the adequacy of their savings and consider adjustments in their financial preparations.

Data from a recent survey of near-retirees in higher education who are saving for retirement indicates realism among this group as they adjust their savings in response to the financial market meltdown. One-half of these near-retirees have changed their retirement savings rate and/or the investment allocation of their retirement savings during the past year in response to the economy and financial markets. Among these near-retirement savers, there is a focus on managing investment risk—52% view protecting existing retirement savings from large drops in value as their most important investment objective. So it is not surprising that 83% of those making an investment change decreased their equity exposure. Among those changing their savings level, 61% increased it. It appears that many intend to make up lost ground in a prudent manner with a long-term perspective as opposed to looking for a quick fix through market timing which would amount to attempting the retirement savings equivalent of a “Hail Mary” pass.

© 2013 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017