Salvage your Retirement Savings

Once we enter retirement, we will be paying our bills and living our lives in accordance with what we have saved during our working lives. Theoretically we have been funding our 401k plans from the early days (ideally our employer has offered some sort of matching) as well as IRAs and other investments, counting on steady growth and appreciation of the balances as has been the case historically. However, history has been re-writing itself this past decade and that somewhat predictable, steady growth has run into some major bumps in the road, impacting all of us to varying degrees. Near and dear to each of us, our nest eggs have been hit and that does not bode well for comfortable, worry-free retirement lifestyles that we are all hoping to experience.

Net worth fell 2.7% last quarter according to the Federal Reserve and now stands at $53.5 trillion. Compare this to the pre-recession $65.8 trillion and you can see the impact of recent events on our savings. And where the significance of this loss to a 30-year-old is noteworthy, for those of us who are retired, it is ever more dire. We do not have the years to try again to rebuild our nest egg. In AARP’s “Running out of money worse than death” 61% of people between 44 and 75 say they fear depleting their assets more than death. More than half of those polled said their net worth significantly decreased during this most recent economic downturn.

I find hope in the darkest of days, and focus in the brightest. I do not judge the universe. ~ Tenzin Gyatso, 14th Dalai Lama

Unfortunately, it is what it is. We cannot make it better by fretting and worrying and although there is no magic silver bullet that will put things back the way they were, there are some things that we can do in our efforts to re-coup our loses.


(1)  Revisit your budget and living expenses and see if there is anywhere to cut back – according to the AARP article quoted above, 47% of those polled found ways to reduce their living expenses by cutting back on entertaining and dining out. If you have not done so yet, you may want to consider downsizing your house. Drastic times call for drastic measures. And don’t be shy when it comes to taking advantage of senior citizen discounts and coupons. Take another look at Senior Citizen discounts – get your money worth for some ideas.

(2)  Meet with your financial adviser – with all of the changes and turmoil, it is important to objectively and critically review your investments and revisit how you are diversified. Use the experts when you are talking about something as important as your future financial security. They do not work for free but they know their financial stuff. In his post “When financial planners are worth the money” David Ning helps to justify the cost of a professional adviser for such important areas as protecting your assets and to provide extra assistance in your investment choices. I think there is real value on scheduling regular, ongoing meetings with your financial person to review the current state of things, make adjustments where appropriate, and make sure that the amounts you are taking from your savings is sustainable over the long-term.

(3)  Avoid risky investments – if it sounds too good to be true, it probably is. Our greatest limitation when it comes to retirement savings and building our nest egg is the amount of time we have to complete the task. The clock is ticking and we cannot count on our investments growing for the next 40 years. But don’t allow yourself to be tempted –  stay away from risky investments and avoid what you do not understand. Some good pointers can be found in How to avoid risky retirement investments by Ryan Guina, including if you don’t understand it, don’t invest in it.

(4)  Going back to work (at least for a while) – I am a big believer in working hard and saving wisely so you can retire and enjoy yourself. But with recent times, the reality is that we may have to figure out a way to earn some more money. If we can do this by pursuing something that we love, our passion, it may actually be a good thing. Otherwise, we unfortunately may have to do what we have to do to get by.

It has been a rough ride for most and we have definitely taken our bruises. The future is unknown and all we can do is our best to prepare ourselves for whatever may come. But I am optimistic. We are learning from our mistakes and hopefully not overly anxious to repeat them. Caution and frugality are replacing risk and spending which is a good thing. And with our health and positive outlook on life (the only way to go…), who knows what tomorrow may bring…

Don’t forget to pick up a free copy of my Navigating the Retirement Jungle, available upon request by mailing to