How to Retire During a Financial Crisis

The only way to insure a safe retirement is to know the facts. How to do that requires work. Read the Wall Street Journal, Invester Business Daily, and Kiplingers Magazine, etc.

Then start looking at what the next stock market move is. Believe it or not, you can figure what the downturn will look like in advance with the knowledge from reading a few daily newspapers that are not the usual local papers which only selectively give you information that would help you determine what the next step should be.

Start your Roth IRA in addition to the 401K, IRA, and other retirement vehicles. Find out all you can about Social Security by reading the entire web on the SSA web page. There are many vehicles to use in SSA.gov. For instance, wife never worked - does not matter. She can collect on yours while you are collecting. Want more money from SSA, then contribute a higher amount so you can collect more (called pay raises by private industry) and also work until over the normal retirement age. Every year past normal retirement age adds eight percent to the amount you receive.

These are just a few ideas. I now know enough about the retirement issue because I have read all information carefully and checked it out. I probably should begin a newsletter for profit on the subject at hand because I am retiring in November 2008. Bad timing? No, just good planning without a consultant. Just the price of a few good newspapers and magazines has made me knowledgeable about retirement prepararion.

I personally have decided to live in Pa because of spouse's family in the area and the knowledge that I will not be taxed in that state on my retirement income. I will not have to use my 401K initially because of planning. You can do the same.

Edward Holmes of NY 9:53AM October 15, 2008

about these 401ks. most of us workers not retired yet have to settle for 401Ks instead of guaranteed pensions. in this spiralling out of control market, many of us don't even have aninvestment vehicle of safety in our plan...only mutual funds. they describe themselves as safety of principal goal but will not ensure it. within my plan I can't choose CDs nor U.S.Treasury instruments. no preservation of my principal deposits. so they take years of your earnings/savings, have use of assets for their investment collateral and won't even offer a vehicle to protect it for your future.

this is some independent control of our assets that all the politicos speeched about.

and now we're supposed to meekly accept this crock, bend over with a "yassir" and go back to work harder and longer til we drop!! this is the role model we're trying to sell the rest of the world!!?!

Demand our savings no longer be held hostage to big finance.

We must be allowed to take our assets to a safe CD-type place without withdrawal penalties if their risk averse vehicles fail us.

joan of NY 2:33PM October 10, 2008

Financial planner and author Ray Lucia suggests a method I'll be using in a few years when I retire, a three-bucket system. Take your overall portfolio, multiply it by 4-5%. Then use that annual-income figure to fund three separate "buckets." The first bucket is for money you need in the next seven years. Money market funds, CDs, short-term bond funds and possibly an immediate annuity would be in that bucket. The second bucket is for money you need in the following seven years. Intermediate bonds, TIPS, a strategic income fund would all qualify. These are a bit more risky but should return enough to fill bucket one after seven years. The last bucket won't be touched for 14-15 years and would contain U.S. stocks, International stocks and some REITs.

This bucket grows enough to start the three-bucket process all over again in 14-15 years. Historically, no bear market has lasted 15 years so this method should insure many nights of good sleep in retirement even during those bear markets.

Dave of CA 10:49PM September 23, 2008

He/she cannot predict what the general economic conditions will be at the time.

But, nest egg, investments, savings notwithstanding, the best advice is to have all debts paid up (no mortgage, auto loan, etc) because the average worker's income will be much less in retirement than the working paycheck was.

So, that reduced income will be needed for current living expenses.

Most average workers will not have huge dividend checks rolling in from huge nest eggs. Modest ones, if lucky.

But they will have reached a stage of life where what is available for spending is very much dependent on reduced income, and big debts should be a thing of the past.

HillbillyBill of TN 4:15PM September 23, 2008