Retirement dreams crumble before reality

When my 401(k) statement came in the mail earlier this year, I refused to open it. I knew the balance would be nauseatingly bad. I didn't need more bad news. I had not gone online to look at my statement since last July, before the credit crisis sledgehammer battered all investments. That was when I took the advice of a couple of former colleagues who were more experienced investors and closer followers of the markets than I and converted some of my cash account into an Asia-Pacific fund on the sage advice that Asian markets would do well even when U.S. markets were down.

Today, half the money I put into that fund is gone. Bravely, I called up my account this morning to see how bad the damage was. From the peak of my retirement investments, which I had built up over 20-some years of sacrificial, consistent saving, I had lost about a third of what I had. Even through the end of last year, knowing that my paychecks were coming to an end, I kept saving, thinking that, with the market down, I'd be buying cheap.

Now, with no more money coming in and no more money going into my 401(k),  I'm no longer "buying cheap." I'm just watching my investments dwindle, and with them the financial security I had hoped to gain for retirement. When 401(k)s and IRAs were first marketed in the early 1980s, the television commercials touted the possibility of retiring as a millionaire. Given the double-digit interest rates at the time and 30 or 40 years to invest, such a scenario seemed plausible. More of a realist, I never thought I'd reach those lofty levels, but I did hope that my persistent savings and investing luck might lead to a nest egg of as much as $500,000. After the tech bubble and NASDAQ collapse around 2000 wiped out about a third of my funds, I recalculated my dreams and hoped I might reach $300,000 by the time I reached retirement age, and I seemed on track to achieve that, or come close to it.

But last year's worldwide market collapse and the loss of my job has shattered even that downgraded dream and forced me into a new reality. Today, after looking at all the negative returns from every fund in my account, except cash, I surrendered and transferred a large chunk of what was left in stocks and bonds to a cash fund. The cash fund won't stay ahead of inflation, paying maybe 2 percent, if that, but a tiny increase is better than a big decrease.

My experience is multiplied by the millions as American workers have been led to believe that 401(k)s and IRAs would provide for their retirements, supplementing the Social Security checks that will provide for a subsistence existence, at best. Defined-benefit pensions, which once dominated American corporations, have largely disappeared, replaced by individual investment accounts. Only governments and a few large corporations are still offering pensions; the rest of us are left at the mercy of the stock market.

For people my age, there is little time for the market to recover its losses, and the lost income while the market tanked might never be recovered. The golden age of retirement has passed. I have already conceded that, once I find a job, I'll need to work well past my usual retirement age. Millions of others in my age cohort are reaching the same conclusion.

The 1980s promise of retiring a millionaire has been replaced with the reality that, for many of us, retirement will never happen.