How to Salvage Your Retirementhttp://www.fool.com/retirement/general/2010/04/22/how-to-salvage-your-retirement.aspx Motley Fool Staff
April 22, 2010
If you're in retirement, or nearing it, last year's huge drop in stock markets around the world certainly got your full and worried attention. Even if you had enough in savings not to panic in the near term, your longer-term prospects suddenly looked a lot grimmer than they had back in 2007, when stocks were hitting new highs.
If you're like most of us, the stock portion of your portfolio has taken a significant hit, despite the big rally we've seen since early last year. Even if your plans don't call for you to draw on that money for several years, seeing your net worth cut significantly is never cheering.
But all hope is not lost, even now. While there's no magic solution that will automatically restore your portfolio's value, there are things you can do to make the most of what you have today -- and food for thought to help you sleep more soundly as the crisis continues to unfold.
What to do now
Perspective is key
Yes, times are tough. And despite some encouraging signs for the economy, there's no guarantee that things will get better quickly. But if you've been saving for retirement, you'll get through it, and things will get better. The low balances you see when you log in to your retirement accounts today are probably higher than they were early last year, and will be higher still in the future. Take a deep breath, and keep that all in mind.
Secure your near-term needs
You diversified for a reason
Remind yourself that it's OK that your stocks are down -- your actions anticipated the possibility, even if you didn't really give it much thought until recently. The money you have in non-stock investments gives you something to live on while you wait for your stocks to recover.
Reposition your stock holdings
For instance, if you think we're headed for a recession, you might lean toward recession-resistant sectors. Procter & Gamble (NYSE: PG