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Boise financial expert details collective trend of retirement account losses in 2022

Retirement plans across the board are taking heavy losses in 2022 as the stock market recovers.

BOISE, Idaho — Idahoans looking at their 401K or retirement accounts in recent months likely have something in common, those accounts are down as of late and have been for some time now. 

Stocks are simply down in recent months. Some Idahoans nearing retirement age are now worried, their account balances are not what they hoped for.  

It's a tough reality, but Boise Financial Expert Dave Petso said it's not like 2008 or 2009, a memory still fresh for some weary investors.

"There's really been nowhere to hide, but this is not like a 2008. We're not down that much. We're not down 50% and nobody knows if the banking system is solvent," Petso said. "There are lots and lots of worries, and I'm sure we'll talk about those, but what we're really dealing with today are people's fears that there's been nowhere to hide."

For starters, Petso said there are a variety of issues contributing to poor stock and retirement account performance. Recovery from COVID, war in Europe, supply chain issues, among the top few reasons. Pew Research also published data in June indicating continued low trust in government. Only 20% of those surveyed said they trust the Government to do what is right most of the time.

"We're hearing it from both sides of the aisle. This is not a time where people feel confident and when they don't feel confident, any losses are seeing in their portfolio is exaggerated, because it doesn't feel like we are coming to a conclusion like, well, don't worry, we have solutions," Petso said. "Three months from now, six months from now, we're going to be okay. That's what it's different this time, but every time has a different feel to it."

A KTVB viewer reached out with concerns about their PERSI retirement plan. They say they've lost thousands in their retirement in recent months and have concerns about affording retirement. PERSI, the public employee retirement system here in Idaho, published an investment report on June 30 to cap off the fiscal year.

PERSI CIO Bob Maynard wrote in the report that 2022, "is the worst start for the calendar year for capital markets since the 1930's." The PERSI report indicates what many other retirement accounts show as well, loses in the stock market.

Fiscal year to date PERSI reported a loss of 9.5%, the fourth worst in PERSI's 55-year history. The three other worst returns happened in fiscal years 1970, 1974 and 2009.

So, if you have PERSI or any other retirement accounts like a 401K, what should you generally do? Don't panic, according to Petso.

"I know it sounds like putting your head in the sand, but I'll tell you, walking through 2000 throughout 2002 and in 2008 in particular, when people were like, 'I just can't deal with this,' then don't open your statements. Watching their joy, literally six months, eight months, a year later, when they finally feel the courage to open it up and they cannot believe what a life changing decision they made," Petso said. "It really is people that sold out at the bottom. In truth, early 2009 literally changed their life in a bad way. They have so much less money than they would today because they took a temporary loss and made it permanent."

Perspective is huge on this topic. Using PERSI as an example, yes, the return is down from the fiscal year, but it is still up 7.1% over the last 25 years. Petso said investing is about long-term strategy, not hour-to-hour like some mobile trading apps have made it seem in recent years. At the end of the day, many 401K and retirement plans are investing in traditionally strong markets, markets that rebound historically.

"These really are times for us to take a pause, take a deep breath and try, as you might, to not be a human being. Quit being an emotional package wrapped in skin. That's what we are. And when it comes to money, people are super emotional," Petso said. "We just know that these are the best investments. All of time has said they are and you don't give up in the middle of it and take a temporary loss and make it permanent. That's always been the rule. I think that that's what we just have to cling to."

KTVB reached out to Gov. Little’s office for insight on Idahoans' concerns with PERSI, specifically if he shares concerns about people being forced to push off retirements. Little’s office shared the statement below:

“Governor Brad Little understands Idahoans are grappling with the many negative impacts of inflation under President Biden’s watch. Idaho is leading the nation in economic prosperity and providing our citizens and businesses historic tax relief, and Governor Little continues to push for national policies that help provide more economic certainty for Americans.”

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