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At least some workers felt an immediate impact on their retirement prospects. In Wisconsin the State Employees Pension Fund suffered an estimated 20% loss in market value for the week. That decline caused some legislators to question whether the state could afford a proposed early-retirement bill that would have allowed some workers to start collecting their pensions at 55 rather than 62.
For retired people who supplement their Social Security with income from investments, the market had seemed a fairly benign environment in which to nurture a nest egg. But no longer. In Billings, Mont., Broker Ronald Scariano was besieged by calls from elderly clients. Some wanted to sell as the market slid downward, but Scariano held them off. "As long as they know that General Motors will keep paying dividends, they're O.K.," he said.
While younger investors can afford to ride out the market and avoid taking a loss until they sell their stock, some older shareholders do not have that flexibility. "At my age," says Don Fuchs, 64, a fund raiser for a Pasadena, Calif., medical research institution, "I don't have time to recoup if I take losses." He thinks back to August, when the Dow hit 2700 and he thought about selling. "But due to inertia and no feeling of urgency, I didn't." He suffered a paper loss of about $75,000.
Some people escaped in time. "It just seemed like the stock market was getting out of hand," says Peggy Anderson, whose husband John recently retired from his job as a pilot for United Airlines. The McHenry, Ill., couple live off the income from his pension, Social Security and investments, and were thankful to have sold most of their stock holdings before last week's plunge. "It was just a matter of how far it would go before it tumbled."
By and large, investors and non-investors alike emerged chastened and a bit more cautious than they had been before. Though some were eager to get back into the stock market to hunt for bargains, many decided to watch their spending more carefully and increase savings. That will weaken the economy in the short run, but it may produce at least one positive side effect. The newfound prudence could ultimately prove a benefit to a country that for years has been dangerously overborrowing and overspending.