5 Retirement Lessons Learned From the Great Recession

The Great Recession of 2007-09 turned retirement dreams into nightmares.

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The Great Recession of 2007-09 turned retirement dreams into nightmares. Stocks plunged as the government took over Fannie Mae and Freddie Mac, Lehman Brothers went bankrupt, and the Reserve Primary Fund suffered losses, shattering investor confidence in safe-haven money-market funds. For many, it was the most hair-raising moment in a crisis that ultimately wiped out $3.4 trillion in retirement savings.

The pain didn’t stop with the market slide. The financial crisis also meant plummeting home values, stagnating wages, a loss of job security and the start of a long era of rock-bottom interest rates that proved devastating for savers.

Many retirees and near-retirees felt the effects of the financial crisis for many years to come. Fifty percent of working-age households were at risk of being unable to maintain their standard of living in retirement in 2016, up from 44% in 2007, according to the Center for Retirement Research at Boston College.

For the older workers and retirees who survived it, the crash is much more than a historical event. It’s a reminder of all their retirement-planning strengths and weaknesses. We talked to preretirees and retirees in 2018 about the lessons they learned from the Great Recession. Today, we're sharing them again to help you navigate current and future market turmoil.

Eleanor Laise
Senior Editor, Kiplinger's Retirement Report
Laise covers retirement issues ranging from income investing and pension plans to long-term care and estate planning. She joined Kiplinger in 2011 from the Wall Street Journal, where as a staff reporter she covered mutual funds, retirement plans and other personal finance topics. Laise was previously a senior writer at SmartMoney magazine. She started her journalism career at Bloomberg Personal Finance magazine and holds a BA in English from Columbia University.