Survival Strategies for a Bear Market
By: Source: AARP Bulletin Today Date Posted: 2002-11-01 10:31:00-05:00
If the bear market has savaged your retirement savings, you may need to boost your income—especially if you need to invest more between now and your original planned retirement date—or find new ways to save money. Here are some ideas:
- Spend less. If you can find ways to spend less in retirement, you won't need to save as much. A rough rule of thumb: For each $50 reduction in your planned monthly retirement budget, you will need about $10,000 less in your total nest egg (assuming a 7.75 percent annual return over 30 years).
With interest rates at historic lows, you may be able to trim your monthly mortgage payments significantly by refinancing. If your need to cut expenses is extreme, consider moving into a lower-cost home or community.
- Save more. Even with today's low interest rates, it pays to sock away as much as you can in tax-deductible retirement accounts.
- Work longer or work part time. You may be able to avoid drawing down your retirement savings either by delaying your departure from the work force or, if you're already retired, by returning to it or taking a part-time job.
- Sell things. Art? Antiques? Collectibles? Liquidating things you don't really need may be a smarter move than selling off investments or dipping deeper into savings.
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