How glad I am to be young

Reading this blog post made me happy about my relative youth:

Some may also wonder how long it will take the market to “recover.” It depends exactly what is meant by “recover,” of course, but one measure might be when the market returns to its pre-crash peak. The historical data is somewhat more distressing in this context.

After the Great Depression, it took 29 years — until 1958 — for the market to reach its pre-Depression, inflation-adjusted peak. After the 1970s recession, it took 24 years — until 1992 — for the market to make a full “recovery” by the same measure. So no matter whether you start from the recent 2007 peak, or from the market’s absolute inflation-adjusted peak during the tech bubble in 2000, we may still have at least a decade to go before full “recovery.”

So just to be optimistic, that means it will take at least 20 years for investments made in the last 10 years to return to the equivalent of their dollar value at time of investment. I've got plenty of time for my portfolio to recover, but what about all those folks in their 50s and 60s looking to retire soon? They'd been depending on their 401k and Roth IRAs and now in a year, the value of that has dropped by 40%. What the hell are they supposed to do, other than keep working longer?

This just underscores the need for Social Security reform being done in the right way. Could you imagine the outrage throughout the country if we had gone ahead and privatized Social Security into the markets 4-5 years ago? That would have just added a whole other layer of tragedy and human cost into the whole mess we're seeing now. I truly hope this puts an end to that whole proposal - it's never really made sense, and it makes even less sense now. Let folks do what they want with their personal approaches to retirement with 401(k)s, IRAs, savings accounts, CDs, and coffee cans full of money, but don't put the heart of the government safety net at risk of suffering the whims of the market.

The one thing that does make me a little bit happy about this is that any investments I make now are going to see a huge increase in value as the market recovers. That 40% drop in value means the investment power of my dollar is now buying 40% more. When things get better, that's going to be a huge payoff. Whee - I found a silver lining!!