Thursday, Jan. 31, 2008

Economic ups and downs just part of life, seniors say

Residents who lived through Great Depression see recent downturn as healthy ‘dose of reality’

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June Roper’s father lost his brokerage firm job when the stock market crashed. He took odd jobs to make money, eventually scraping enough together to move the family into a rented row house. A few years later, he opened his own brokerage firm in Philadelphia.

It is a typical story of financial loss and recovery that has begun playing out across America today. But the market failure in Roper’s story happened in 1929 and caused the Great Depression. And June Roper, now a 78-year-old retired stockbroker, said that should provide perspective on the nation’s recent economic downturn.

‘‘There have been so many ups and downs that if you live to be our age, you realize that it’s not the end of the world,” Roper said.

Roper was one of four residents at Riderwood Retirement Village in Silver Spring who talked last week about the current economy in general and how it affects senior citizens in particular. All four follow the stock market and business news daily; Peggy Herndon, 81, and Mary Ricks, 77, were longtime members of investment clubs and are currently co-chairs of a monthly investment seminar at Riderwood.

The group viewed the economy’s woes as healthy and needed to correct an overpriced housing market. New home sales fell more than 26 percent in 2007 compared to 2006, and the Dow Jones Industrial Average, an index that tracks the nation’s top stocks, is down more than 7 percent this year.

‘‘It’s a dose of reality,” said Vincent Leahy, 77, a retired attorney. ‘‘If you were intelligently positioned before this volatility came, then you have nothing to worry about. It’s the speculators and the people that are buying on margin that get burned.”

While all four have sold their houses, they know about the housing market anecdotally because most Riderwood residents used the sale of their homes as equity for a deposit on an apartment at the retirement community. The deposit amount ranges from $134,000 to $504,000 based on the type of one- or two-bedroom apartment and is fully refundable.

New residents were buying the bigger apartments at the peak of the housing market because they were getting more than expected for their homes, Roper said.

‘‘Whoever heard of a housing market where someone put a bid in way over the price [the homeowner] was asking for?” she asked.

‘‘That’s how I sold mine,” Ricks said to laughter.

The stories have changed recently, however. A friend of Leahy’s was unable to move into another retirement community because he could not sell his current home. Herndon knows one woman who needed three months to sell her Columbia home.

‘‘She was lucky,” Herndon said.

Riderwood received $50 million in deposits and 500 apartment requests last year and has a 98 percent occupancy rate, spokesman Dan Dunne said. But the overall economy and housing market have affected prospective residents.

‘‘Now more than ever, people are tapping their personal investments to qualify to live here, where before they were using the equity in their homes,” he said.

Riderwood’s parent company, Erickson Retirement Communities, recently launched a realty and moving service to help retirees sell their current home and plan for the rest of their retirement.

Some Riderwood residents have begun shuffling their personal finances. At the on-campus hair salon Herndon visits, one woman is cutting back appointments to once every other week. Most residents live on a combination of pensions, investments and Social Security and are focused on producing income instead of building estates.

Leahy said that as long as his investments keep returning dividends or accruing interest, he would be fine.

‘‘I’m not worried about leaving my daughter any more money,” Leahy said to laughter.

But because many residents have fixed incomes, there was concern about inflation, a rise in prices that could be a byproduct of interest rate cuts by the Federal Reserve Board in its attempt to help the economy. Residents already must pay a monthly cost-of-living fee, which ranges from about $1,400 to $2,100 depending on apartment size.

‘‘People in our situation would be burned much more by inflation,” Leahy said.

Herndon said she receives an occasional phone call from a resident asking for financial advice and joked she tells people to call Roper, who in turn offers the same advice to everyone.

‘‘Just hang in there,” she says, ‘‘because it’ll be all right.”