January 26, 2009
Is anyone else worried about retirement planning?
I’m a PC asked:
I am young, but I am always told if you invest $X each month for so many years at 8% average return then you will have enough to retire. I’ve been contributing 12% of my income to my 401(k) since I was 23 and as of right now I have lost money. Are those models going out the window with the economy in the crapper? It is starting to worry me since I’m not counting on SS being there when I retire.
Efrain
I am young, but I am always told if you invest $X each month for so many years at 8% average return then you will have enough to retire. I’ve been contributing 12% of my income to my 401(k) since I was 23 and as of right now I have lost money. Are those models going out the window with the economy in the crapper? It is starting to worry me since I’m not counting on SS being there when I retire.
Efrain
Comments on Is anyone else worried about retirement planning?
No do not worry because in any 10 year period in the stock market’s history it has gained money so by the time you hit 65 this will not be a factor
Its funny that you ask that cause me and my co-workers where just talking about that.. WE all have 401k and all of us took a huge hit to the point that we are all pulling them out and putting into cd’s or something i think it has to go old school and have you money stashed somewhere safe.. I mean there is even an article online talking about how people had to wait to retire cause their 401k was hit so hard by the stock fall-out
This is a rough patch in the market and we have all “lost money” (at least on paper). But you need to remember a few things. The stock market, like most things, is cyclical in nature. It goes up and it goes down. BUT historically after it goes down, even in a large downturn like now, it comes back up and surpasses it’s previous high. Even during the Great Depression there has never been a 10 year period where the stock market lost value. Individual stocks, yes. The market as a whole, no. This is a period of “sale prices” on the stocks of good and great companies whose share prices has been dragged down by the market at large. So this is a great time to buy the stocks of sound companies. Do you really expect that Microsoft, Pepsi co, Coca Cola, Radioshack, Conocco Phillips, General Mills, and Budweiser and all of the other strong companies are going to go out of business?
I suggest that you read Ready, Set, Retire by Ray Lucia. It really changed how I look at my retirement savings. I no longer view it as one lump called retirement. Now I have made some different choices and I really haven’t worried too much about this downturn at all. Because I have confidence in my plan and in the market and the American economy.