Joel and Jessica Soffer feel fortunate.
The Long Beach residents were able to retire early and still live comfortably enough to provide help for their two adult children while taking annual vacations to such places as Shanghai and Edinburgh, Scotland.
When at home, Jessica, 59, volunteers for the American Cancer Society and Joel, 63, rakes leaves at the Japanese Garden at Cal State Long Beach.
But after the market downturn last fall, they know they can't continue to live the way they have been living. They are cutting expenses, looking for ways to increase their income and hoping they won't be forced to start punching the clock again.
"If we had to, we would go back to work," Jessica said. "But the thought of being accountable every Tuesday, Wednesday and Thursday at 10 a.m. has become unappealing."
Since last fall, Joel's retirement portfolio has dropped from $550,000 to $380,000. That was the main source for funding their trips, in addition to their daily living expenses. If the portfolio appreciated 10% in a year, for instance, Joel would sell enough stock to give the couple an equivalent amount in cash.
"I can no longer rely on appreciation," said Joel, a former branch manager at Bank of America.
The steep losses in the portfolio were mostly the result of his decision to keep 80% to 90% of his retirement savings in stocks and equities when the market started taking a downward spiral last fall, said Donald Hance, a financial planner and founder of Glenmore Financial in Pacific Palisades.
"At this stage in his financial life cycle, he shouldn't have exposed himself to so much risk," Hance said. Had Joel kept less than half of his savings in stocks, Hance said, he would have lost half as much as he did.
Joel has since parked his savings in a money market fund earning less than 1%. He spends time daily reading financial newsletters and websites and wondering when to reenter the market.
"That's what [I] and others do," he said. "We chase the yield. It worked for quite a while."
Hance suggests that Joel stop looking to his investments for their "entertainment value" and develop an appetite for boring investments. Selected strategically, he said, these could provide the Soffers with a reliable income stream and keep them from having to go back to work. But they must reduce expenses for the next three years, he said, until Jessica's Social Security income kicks in.
