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Investor Outlook in a Changing Economy

In 1999, when the Nasdaq Composite Index was up 85 percent over the previous year, technology stocks seemed to be turning pennies into dollars.1 But when the Nasdaq and its sister stock indexes began to slide in the first quarter of 2000, they carried with them the inflated expectations of a large number of investors.

Since then, falling yields and a lukewarm recovery have forced many pre-retirees and fixed-income investors to reevaluate their expectations and adjust their plans for the future.

Market Returns
In April 2001, retirement plan participants expected 19 percent annual stock market returns over the next 20 years. By January 2002, similar projections had slumped to 10 percent, possibly indicating a recognition of the market’s inherent volatility.2

By adopting a more conservative outlook, you may actually be able to protect yourself from some market risks. As the accompanying graph shows, inflated expectations could cause you to burn through your savings much faster than anticipated.

Retirement
Since the stock market began to slide, the number of Americans considering early retirement has fallen from 44 percent to 39 percent.3 Although disappointing market performance may have thwarted retirement dreams for some, careful planning could help you reach your goals in spite of challenges. To make the most of your retirement savings, you might consider reevaluating your asset mix, eliminating some expenses, or adjusting your retirement distributions.

Investor Outlook - Annuity Rates, Annuities, Annuity Quotes and Fixed AnnuitiesRecent market volatility has changed the financial outlook of many investors. Realigning your financial expectations with your retirement goals may enable you to hope for the best while being prepared for the worst.

1) Wiesenberger, 2002. The Nasdaq Composite Index performance described is for the period 12/31/1998 to 12/31/1999. The performance of an index is not indicative of the performance of any particular investment. Individuals cannot invest directly in an index. Past performance is no guarantee of future results.
2) CBS MarketWatch, January 4, 2002
3) 2002 Retirement Confidence Survey, Employee Benefit Research Institute

© 2002 Emerald Publications

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