The still possible dream: Saving for retirement

Robert Bong

MYTH: Your retirement accounts were squeezed with the economy, and now you'll never be able to retire.

FACT: The recession may have damaged your savings, but it hasn’t destroyed your retirement plans. A financial adviser offers advice to make the most of what you have, as well as a retirement plan.

Baby boomers watched in dismay as the sagging economy took its toll on their 401(k) and other retirement funds. They saw their hopes and dreams of retirement vanish along with their investments.

All is not lost, however, and baby boomers can still plan on retiring in the near future if they follow a few simple steps.

Keep on saving

“Don’t pull your retirement funds out of the market,” advises financial planner Joe Mattera of Homer Glen, Ill. “That never works. You can never recoup what you lost if you no longer have your money in the market. It’s a fallacy that you will never recover what you lost."

It may take some time, he says, but the market will inevitably bounce back and go even higher. You don’t want to be on the sidelines as the market improves, so keep investing, even in a bad economy. 

“Invest more, if you can,” Mattera says. “Maximize your retirement contributions.”

Review your savings strategy

“What makes your 401(k) fund work is where you have your money invested,” Mattera says.

As boomers get closer to retirement, Mattera advises they move assets into more conservative investment vehicles, such as CDs and mutual funds. You can keep some money in stocks, but focus on less volatile areas of the market.

“Talk to your fund manager about making your money safer,” Mattera says.

Look ahead

“Retirees living in downtown Chicago need more money to live on than someone who retires to Biloxi, Miss.,” Mattera says. “An extravagant lifestyle will require you to have $1 million or more to live on. Someone who wants to enjoy a simple life can live comfortably on a lot less money.”

Ask yourself whether you’ll be staying in your home or moving. Do you want to travel? This will help determine how much money you will need to live on in retirement.

“Social Security will provide a lot less than people think,” Mattera says, “and people need to have money ready for when they stop working.”

On the Web

A good source for retirement planning is

It has links to Social Security, retirement savings calculators, IRA and 401(k) rules and other retirement questions without promoting any particular financial planning company.

Number to know: $16,500

 That’s the 2009 annual limit for contributions to your company 401(k). If you’re older than 50, you can contribute another $5,500 if your plan allows catch-up contributions.

Quotes of Note 

“Your retirement plan is like a cake mix. You never know how it’s going to turn out until you put in all the ingredients.”

“There’s no magic number on how much money people need when they retire. What works for some won’t work for others. But we all need to be ready when we stop working.” 

-- Joe Mattera, financial planner