Will Your Retirement Weather the Economic Storm?

Category: Financial and taxes in retirement

—By now you have probably received your November 401k statements, and maybe you even had the courage to open them. If you haven’t lost 40% of your portfolio since last year, cheer up – you’re a winner!
This article will explore strategies for how you can weather the depressing economic turmoil that has engulfed us in late 2008. We would love to hear what you are doing and thinking about it too. Just go to our Forum and join the thread on “Retirement and the Economic Mess“.

There is no doubt that the economic mess is negatively affecting most retirements. Not only have trillions been shaved off of our financial portfolios, but the same statement applies to our respective real estate equity. People who have already retired are wondering how they are going to survive with diminished resources. Prospective near term retirees are questioning if they should delay retirement. And younger folks wonder if they ever will be able to retire.

Here are some possible strategies to consider:
- Don’t panic and sell. We like the advice we have heard elsewhere – you haven’t lost it until you sell it
- Keep investing. If you are working and contributing to your 401k or the like, keep putting money into equities. You might lose some in the short term, but if you believe in the American economy, today’s low prices will put you ahead some day. At least that’s what we think Warren Buffett would say
- Think about working longer. The more money you have in your investment portfolio, the more worry-free your retirement will be
- Get a part-time job. If you are retired or must retire soon, include plans for a part-time job. Not only will that give you a financial cushion, but it will keep you busy too
- Move to one location instead of two. Many retirees were hoping to be snowbirds – having one home in a warm location for winter and another for the warm months. If your resources don’t permit that, consider the Carolinas or Georgia where you might get the best of both
- Downsize to a more manageable home. Right now might not be the time to sell anything, but think about what makes sense for you long-term. In our opinion too many people hang on to their big suburban homes for too long – all those extra expenses (taxes, heat and A/C, maintenance) could be going toward something fun
- Get creative. So your first plan for retirement didn’t work out, or is on hold. Get ready with plan B!
- Look for bargains. If you will be able to afford living in a retirement community and you have the cash, think about buying now. In some sunbelt states 50% of the houses for sale are in foreclosure. The banks owning them aren’t sentimental, they want a sale. Advice we read recently on foreclosure purchases is to: focus on highest quality properties; look for languishing properties; make a good offer; offer to close quickly

Posted by Admin on November 11th, 2008

2 Comments »

  1. The NY Times has an interesting article on this same topic – the Tarnished Golden Years

    by Admin — November 15, 2008

  2. WASHINGTON (AP) _ The National Association of Realtors says home prices fell in four out of five U.S. cities in the third quarter, the latest sign of how the U.S. housing market’s decline is spreading throughout the

    by national association of realtors — December 8, 2008

RSS feed for comments on this post. TrackBack URL

Leave a comment