If Your Retirement Savings Have Been Hit Hard, Take Steps to Minimize Damage

by Francine Huff
October 10th, 2008
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If you’ve been planning to retire in the next few years the $2 trillion loss in retirement savings over the past 15 months may make you want to scream. The beating that retirement funds have taken has many people wondering what the heck they’ve been working for all these years if they can’t enjoy the fruits of their labor. You have every right to be upset. But try to stay calm and take some steps to minimize the damage to your overall finances.

• Move any money you need in the next five years out of stocks. If you’re over 60, some financial experts say you shouldn’t have more than 50% of your retirement funds tied up in stocks anyway.

• Diversify your portfolio so all your money isn’t tied up in one sector. David McPherson, founder and principal of Four Ponds Financial Planning in Falmouth, Mass, wrote in an ABC News column that Treasury notes, CDs, or short-term bond funds are safe places to put a portion of your nest egg, but that you should avoid liquidating your entire portfolio.

• Consider downsizing if you live in a bigger home than you need. It may take a while to sell your home in this housing market, but moving to a less expensive home can help you cut expenses for your mortgage, utilities, and taxes. If you plan to continue working a while longer, moving closer to your job can help cut your fuel costs.

• Moonlight at a second job or start a part-time business to earn extra money. Who knows, this second job could even turn into a nice part-time gig or small business after you retire from your current job.

• Pay down your credit cards and avoid taking on new debt.

It’s important to be proactive about managing your money so you can weather the current financial storm.

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This entry was posted on Friday, October 10th, 2008 at 4:04 pm and is filed under Topics for Seniors . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “If Your Retirement Savings Have Been Hit Hard, Take Steps to Minimize Damage”

  1. Anne Holmes Says:
    October 15th, 2008 at 11:41 pm

    If you’re a single Baby Boomer whose retirement savings have been hit hard, and you have a home that’s paid for, the reverse mortgage option looks like a great option to use to free up some disposable income.

    However, if you’re not in a position to qualify for a reverse mortgage, another option to consider would be buying a home with a friend, which allows you both to take some of the tax benefits of home ownership, provides companionship, and allows you to get into a home ownership position for a smaller investment.

    This concept, which TIME magazine recently termed “co-ho,” for “communal home ownership.” I wrote about it in a recent blog post, which you can find here: http://boomerlifestyle.com/blog/got-the-latest-lingo-down-raise-your-hand-if-you-know-what-this-question-means-are-you-a-cougar-whos-craigslisting-because-youre-about-to-become-a-co-ho/

    Hope this helps open some eyes to another possible way to relieve some of the pain of the recent economic meltdown.

    Anne

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