Rescuing Retirement: Advice For All Ages

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Ray Martin Offers Tips For Restoring Depleted Pensions And 401(k)s
NEW YORK, Oct. 9, 2008

(CBS) As the stock market continues to plummet, it’s draining Americans’ retirement funds.

New numbers suggest that over the past 15 months, pensions and 401(k)s have lost a total of $2 trillion. So what do workers do now? Contributor Ray Martin offers some specific advice for workers in different generations, as well as suggestions for how their portfolios should be allocated.

For Workers 60+
CASH: 10 percent

BONDS: 40 percent

STOCKS: 50 percent

Move money you’ll use within 5 years out of stock:

If you’re going to be relying on this money, you can’t take any risks with it, says Martin. You should put it into bonds and cash. It’s still OK to have some of your money in the stock market, even if you plan to retire soon. Hopefully, you’re not going to use all of your 401(k) the first year you retire. If you’re retired for 10 or 20 years, your money still has some time to recover and grow.

Figure out when you’ll need to tap into your 401(k) savings. Just because you’re retiring in a year or two doesn’t necessarily mean you’ll need the money from your 401(k) right away. Perhaps you also have a pension, maybe you’ll be receiving social security, or maybe you plan to downsize your home and live on the sale proceeds for awhile.

Workers In Their 50s
CASH: 5 percent

BONDS: 30 percent

STOCKS: 65 percent

Workers in this age group can afford to have a bit more money in the stock market, because their accounts have more time to bounce back from the current meltdown. But if you’re in this age group, time alone is not going to heal your 401(k)’s wounds. It’s going to require some work from you.

Increase contributions:

If you’ve lost money, you need to regain ground quickly. The good news is that you’re allowed to contribute more to retirement accounts once you hit age 50. Take advantage of this. Once you stop working you can’t save pre-tax money, and you certainly don’t have anyone agreeing to match your savings as your employer does now.

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