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Don't Let the Recession Rule Out Retirement

Save more, use 'catch-up' tax law provisions to turn things around

By Wesley Oliver, Newser Staff

Posted Sep 20, 2009 4:48 PM CDT

(Newser) – Retirement savers have been facing grim truths, like the fact that a 50% portfolio loss requires 100% in earnings to recover. But middle-of-the-road investors could recover in as little as 2 years if they make contributions, receive a company match, and see fair long-term portfolio returns, writes Linda Stern in Newsweek. Still, much depends on a person's age and wealth before the recession hit.

Younger investors will fare the best, for they can afford to take bigger risks and take advantage of historically low prices. Meanwhile, older folks—some of whom "may never recover"—should save more and use “catch-up” provisions in tax law to invest more money in their 401(k)s and personal retirement-savings accounts. Above all, experts say, the best advice is to spend less, save and invest more, and hope the math improves.

[Images (1)]

[Quotes (2)]

The average 401(k) account was off about 22 percent from where it stood at the end of 2007. (Shutter Stock)

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What's the best way to rebuild your nest egg? According to most financial advisers, don't lament the tumult of the last year or try too hard to profit from short-term share prices going forward.
- Linda Stern, Newsweek

Instead, clients should simply stick with their plans: save and invest more, spend less, and try not to worry about the ups and downs that will always be a part of the financial markets.
- Linda Stern, Newsweek

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COMMENTS

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Showing 3 of 3 comments

justme

Sep 21, 2009 12:41 PM CDT

Actually, I got hurt bad in the market initially but most of it has come back. Unless you need it to survive, why sell on a market downturn? American business is strong enough to come back even if the politicians try to "fix" it.

schmidtkoff

Sep 21, 2009 3:27 AM CDT

i vote for a redistribution of wealth. with all of the Billionaires in the conuntry - they could give every adult citizen @10,000. dollars to get out of the proverbial hole they're in. and that's a conservative figure.

RobN

Sep 20, 2009 11:09 AM CDT

All that "expertise" and all they got is save more? Thanks for the help, I certainly wouldn't have thought of that on my own.

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Don't Let the Recession Rule Out Retirement