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Money Matters: Smart financial planning for 2009

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January 26th, 2009
Recent volatility on Wall Street has a lot of older Americans feeling anxious about retirement. Reading the morning paper may make you consider stashing cash under your mattress. But panicking won t recoup your investments. We rounded up a handful of financial experts to shed some light on what youcando to stay on top during economic downturns. If you re ' in your ' 50s or 60s . . . Time is on your side. Remember the crash of October 1987? The tech bubble that burst in 2001? Although no one can predict precisely when it will happen, most financial experts agree that the stock market will recover. VeteranWashington Postfinancial columnist and author ofHow to Retire Happy, Stan Hinden says the Dow Jones Industrial Average has generally trended upward over the last century. "In the short term, markets fluctuate, but in the long term, they keep going up," Hinden says, "and it is very hard to argue with history." Hinden says people in their 50s and 60s may want to consider delaying retirement for a few years, by which time 401(k) balances should improve. He also recommends delaying Social Security payments because they are discounted less as you age. Colorado Allstate agent Roger Francis says that if you don t already have a personal financial advisor, you should get one now. Francis says no matter the size of your nest egg, today s uncertain economy means you need guidance to protect it. "So many people in their 50s and 60s have 401(k) plans and are preparing to retire, but your company s 401(k) planner is not going to give you advice on where to put your money or how to withdraw it," Francis says. If you re in your 70s or 80s . . . Scott Munkvold, a principal at Chicago-based Financial Solutions Advisory Group Inc., says the "general rule is that as you get older, your investments should get more conservative." He says it is especially important for retired people to reassess their tolerance for risk. If the ups and downs in the market are causing you to lose sleep at night, Munkvold says you should reduce the percentage of your portfolio invested in stocks. Shelby Smith, an economist whose BHC Marketing firm owns the website TheRetirementPros.com, advises older retirees to put money in "safe places" like bank CDs, treasury-indexed securities, money market accounts, and fixed annuities with a reputable insurance company. "Instead of trying to make a killing in the market, you should ask yourself, Do I have enough money to continue my retirement for the rest of my life? " Smith says. There is one notable upshot to the market slump, according to Atlantic Trust wealth strategist Rebecca Milliman, who says this is an "opportune" time to make gifts to heirs. "With equity and real estate values being depressed there are a host of different estate strategies that are much more advantageous to do now than they were even a year ago," Milliman says. Meghan.Streit@erickson.com

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