NEW YORK, Oct. 9, 2008
Rescuing Retirement: Advice For All Ages
Ray Martin Offers Tips For Restoring Depleted Pensions And 401(k)s
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Play CBS Video Video Financial Advice By Age Group Financial Advisor Ray Martin explains how to make the most of your 401(k) based on how soon you'll retire. He shows Maggie Rodriguez what your portfolio should look like from ages 20 to 60.
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Most experts say that for the average worker, if you are working and saving for retirement over 30 years - and all you will have is your 401(k) and Social Security - you will need to contribute a total of 13 to 15 percent of your pay each and every year into your 401(k) plan account to have a reasonable chance of having enough money to pay for your retirement. (CBS)
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Special Report Money Matters Get words to the wise, from the wise, on handling, making and saving money.
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Section Weathering The Downturn In this economy, it's smart to save. CBS News shows you how.
New numbers suggest that over the past 15 months, pensions and 401(k)s have lost a total of $2 trillion. So what do workers do now? Contributor Ray Martin offers some specific advice for workers in different generations, as well as suggestions for how their portfolios should be allocated.
For Workers 60+
Move money you'll use within 5 years out of stock:
If you're going to be relying on this money, you can't take any risks with it, says Martin. You should put it into bonds and cash. It's still OK to have some of your money in the stock market, even if you plan to retire soon. Hopefully, you're not going to use all of your 401(k) the first year you retire. If you're retired for 10 or 20 years, your money still has some time to recover and grow.
Figure out when you'll need to tap into your 401(k) savings. Just because you're retiring in a year or two doesn't necessarily mean you'll need the money from your 401(k) right away. Perhaps you also have a pension, maybe you'll be receiving social security, or maybe you plan to downsize your home and live on the sale proceeds for awhile.
Workers In Their 50s
Workers in this age group can afford to have a bit more money in the stock market, because their accounts have more time to bounce back from the current meltdown. But if you're in this age group, time alone is not going to heal your 401(k)'s wounds. It's going to require some work from you.
Increase contributions:
If you've lost money, you need to regain ground quickly. The good news is that you're allowed to contribute more to retirement accounts once you hit age 50. Take advantage of this. Once you stop working you can't save pre-tax money, and you certainly don't have anyone agreeing to match your savings as your employer does now.
Workers In Their 30s and 40sWeathering The Downturn: In this economy, it's smart to save. CBS News shows you how.
Martin says this is the age where it's easy to stop saving for retirement, because you want to buy a home or put money toward your kids' college educations. Or, in the case of many workers now, you're just too scared to keep putting money into the market. He warns interrupting your savings is the worst mistake you can make.
Diversify your portfolio:
Since retirement is still a long time away, your retirement savings can be invested mostly in stock funds. But now that your balance is larger, diversification becomes more important.
If the stock market falls 10 percent, a $100,000 portfolio invested 100 percent in stocks will fall in value by $10,000. On the other hand, if your portfolio was invested 75 percent in stocks, it would only fall $7,500, which would be easier to recover from.
Also, make sure that you're invested in a wide variety of stocks - small companies, large companies, foreign companies, etc.
Workers in their 20s:
Martin says this age group can afford to be invested almost solely in stocks. The market is ugly right now, but retirement is far away and your portfolio will have plenty of time to grow. You can afford to take some risks at this point in your life, and it's almost guaranteed that these risks will pay off down the road. The most important thing of all is to get started now.
Begin saving 6-10% in 401(k):
Sign up for your company's retirement plan and start by saving at least 10 percent of your salary. The sooner you get started, the more money you'll have. Even if the markets are down now, the beauty of compound interest will still win out.
Most experts say that for the average worker, if you are working and saving for retirement over 30 years - and all you will have is your 401(k) and Social Security - you will need to contribute a total of 13 to 15 percent of your pay each and every year into your 401(k) plan account to have a reasonable chance of having enough money to pay for your retirement. So, if your employer contributes three percent, and you contribute 10 percent, the total contribution would be 13 percent.
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Add a Comment See all 23 Comments
- Don''t forget that all the tax cuts for the rich were funded from the social security trust fund. It provided the offsetting funds necessary for our multiple wars and other government functions.
Many of those rich people who got the tax cuts lived off investments and have never paid a dime of payroll tax. - Reply to this comment
- Posted by rharrin1 at 09:52 PM : Oct 09, 2008
Very good post. We don''t have much chance of getting the Crooks in Washington to do what you as saying. But on the off chance that at some point in time we get people in office that will do as you are saying. - Reply to this comment
- oh ya this is good advice the rest of the world is not having any problems with their finances so just convert your dollars..
Posted by LGgeek
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I thought other markets were crumbling because of our plight? - Reply to this comment
- "The only way you can preserve your wealth is to turn it into something other than dollars."
oh ya this is good advice the rest of the world is not having any problems with their finances so just convert your dollars.. - Reply to this comment
- "Perhaps the best thing that you can do to save retirement benefits is to not vote for republicans this year by Strangeworld"
It''s idiots like you that have to politicize everything that cause problems not to get fixed. Republicans and Democrats are two sides of the same coin, problem is ALL of our politicians are bought and paid for. They sucker people like you into blaming the "other guys" and you fall for it. - Reply to this comment
- This guy - Ray Martin suggested that STOCKS: 90 percent for Workers in their 20s to STOCKS: 50 percent for Workers 60+.
That tells me Mr. Ray Martin has a great personal interest in the Wall Street.
He could be a Stock-Broker - i.e. every time some stock trading happens, he wins.
My take is when the economy is stable, then one could put (no more than) 50 percent in stocks.
When the Economy is sooooo bad - take all your money out of stocks.
After all, for someone in their 20s and make minimum wage - how in the world would the person be able to invest 90 percent in stocks?
What a bunch of bull!
Kind of like a real estate Realtor- they would never discourage one to purchase and/or sell a home! - Reply to this comment
- Perhaps the best thing that you can do to save retirement benefits is to not vote for republicans this year. Republican economic policy since 1980 heavily favored the wealthy and big-business campaign donors to the republican party over the financial well being of the American worker and Senior Citizens. If you''re a senior citizen, you''d better think twice about voting for any republican this year - McCain and his friends are not looking out for your well being.
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- YOU''''D Damned well better BELIEVE there is something SECURE about Social Security. I''''m sitting right here and REAL American''''s like ME are NOT going to let our Old Timers Down. Now go shove your greed or whatever else it is you are selling, where the sun don''''t shine. It''''s time WE got back to WE the PEOPLE!! It''''s time to turn to OTHER leadership...
Posted by irmcvet97 at 11:14 AM : Oct 09, 2008
I''m not worried about the oldtimers - they''ll be getting their SS for a few years yet. What I am worrying about is SS for 47 year-old me. This Ponzi scheme run by the government can''t continue forever and as the average age in the population and percentage of workers drops, sooner or later the money will run out. I''m completely ignoring it in my retirement calculations and if you''re banking on it being there for you in 20-25 years I certainly hope you''re right - but I''m not as hopeful. - Reply to this comment
- Thousands of pictures of NAZI SS Officers and Adolf Hitler found property owned by Sarah and Todd Palin. Also an apparent Altar dedicated to the notorious Angel of death Dr. Joseph Mengele along with thousands of NAZi era coins.
Posted by ms_michelle at 01:39 PM : Oct 09, 2008
That mescaline you''re doing is really messing you up. Switch to pot before it''s too late. - Reply to this comment
- I have been buying raw - udeveloped land for the last 25 years -- It''s value has not depreciated. Buying it only when I could pay cash fot it. When I retire I will sell it off on contract, collecting the interest. This way I will develop an income. I am looking good for my retirement -- there is a reason it is called REALestate.
- Reply to this comment
- YOU''''D Damned well better BELIEVE there is something SECURE about Social Security. I''''m sitting right here and REAL American''''s like ME are NOT going to let our Old Timers Down. Now go shove your greed or whatever else it is you are selling, where the sun don''''t shine. It''''s time WE got back to WE the PEOPLE!! It''''s time to turn to OTHER leadership...
Posted by irmcvet97 at 11:14 AM : Oct 09, 2008
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The problem with Social Security is going to happen in about 10-15 years, when my kids, who are now in their mid 20''s, realize that they are expected to support 2 seniors each, and the gov''t starts to take more than 50% of their incomes to pay for this. We are going to see a huge revolt, where this generation says "No more," and they vote for representatives who then vote to abolish or severely limit SS. And who can blame them, we continue to push more and more debt to our children, there will come a point when they can''t afford to pay what we''ve promised they will pay. - Reply to this comment
- When Senior Citizens do their homework on the Social Security issue, they''ll see that the republican party has repeatedly tried to destabilize the fund by tying it to the stock market. Can you imagine the sorry situation that the elderly would be in right now if the republicans would have been allowed to change Social Security to a stock market linked program. Senior Citizens should realize that the republican party is no friend to them.
- Reply to this comment
- Um, here''''s a clue - there is NOTHING in the SS Trust Fund except IOUs. There is nothing SAFE about SS.
Posted by csmcmillion at 10:56 AM : Oct 09, 2008
YOU''D Damned well better BELIEVE there is something SECURE about Social Security. I''m sitting right here and REAL American''s like ME are NOT going to let our Old Timers Down. Now go shove your greed or whatever else it is you are selling, where the sun don''t shine. It''s time WE got back to WE the PEOPLE!! It''s time to turn to OTHER leadership... - Reply to this comment
- Things are more simple than that. I am writing form Naples (Florida). I voted for Reagan in the 80s and for Bush in the 2000 election. I am an independent voter. I care about issues, about having SOMEONE COMPETENT WITH A SOUND PLAN IN CHARGE. This time I will vote for Obama-Biden SIMPLY BECAUSE MY FAMILIES%uFFFDECONOMY CAN NOT AFFORD 4 MORE YEARS OF THE ECONOMIC MISMANAGEMENT CARRIED BY BUSH AND SUPPORTED BY MCCAIN. As simple and painful as that. McCain has change, quite conveniently, his economic views in the last 2 weeks after years of saying, voting and acting in a complete different direction. Too late. I just can not afford to wait and see while McCain "learns" how to manage the Economy. Or even worst: While McCain and Palin use smear tactics and fear built on prejudices as their "main arguments". Once again: it is that simple.
Posted by TheBigDiffer at 10:40 AM : Oct 09, 2008
Yes that is what our fathers would do! I remember before my Pop died, some Snake Oil Salesman came around trying to tell him if he''s support him he''d bring back Family Values. Pop told him, "Friend YOU make sure I can Feed and Care for my Family and I''ll take care of their Values. How did WE get so far form home? - Reply to this comment
- I remember when workers made it possible for their Pensions to be Guaranteed just like Savings. Course that was BEFORE Trickle Down! That was before we started believing the the Rich could oversee themselves and do what is right for ALL employees of a Company. How far we have fallen buying into the Republican View... HOW VERY FAR
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- [Just because you''re retiring in a year or two doesn''t necessarily mean you''ll need the money from your 401(k) right away.] I don''t understand this statement for when I retired I needed to move my 401{k} to an IRA.
- Reply to this comment
- "Now admittedly she cannot touch the principle, BUT it`s there and it`s safe and they can COUNT IT AS PART OF THE TOTAL."
Um, here''s a clue - there is NOTHING in the SS Trust Fund except IOUs. There is nothing SAFE about SS. - Reply to this comment
- Thank you God for not allowing the Privatization of Social Security to Wall Streets. The Social Security money would have disappeared within 1 years after 55 years of hard work.
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- Viva Social Security forever!
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- This is horrible advice and irresponsible of CBS to be advising anyone 60+ to have ANY monies in stocks.
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