Retirement Savings? What savings?

By: Jeremy Radnor

With the current economic conditions, many people (especially baby boomers nearing retirement) are becoming increasingly more concerned with their retirement savings and 401(k).  In general, saving and adding to your 401(k) is always a good idea.  Unfortunately, in the past year alone, investors with the most saved have lost the most.  Investors with at least $200,000 in savings have lost over 20% while investors with $50,000-$100,000 lost 13%-15%. The losses are significant but investors can find some comfort in knowing that since 2000, savings portfolios have seen an average increase in their value by 161%.  However, when the market is facing such turmoil one is left to question what to invest in? 

 Upon contemplating what to invest in, one must take two sets of two very important questions into consideration.  The first set of questions would be, “How much risk am I willing to take?” and “How much risk do I need?”  The set of questions to follow should consist of, “What are my financial goals?” and “How far am I from accomplishing these goals?”  Once an investor has answered the second set of questions, the answers to the first set should become obvious. 

 If an investor is far from retirement and distant from their financial goals, the investor most likely choose to invest in riskier ventures such as stock.  If the investor is near retirement and near their financial goals, they will most likely choose to place their money in safe investments such as bonds.  Ultimately, every investor is different and each investor needs to find the balance which suits them best.  This will lead to a successful and happy retirement.  

Links:

http://en.wikipedia.org/wiki/401(k)

http://www.nytimes.com/2009/01/25/business/25count.html

http://money.cnn.com/2009/01/20/pf/Mole_rebalancing.moneymag/index.htm?postversion=2009012108