You don't need a calculator to tell you the simultaneous crumbling of the stock, bond, and real estate markets has dealt a blow to your retirement plans.
Those carefully fed 401(k)s and Individual Retirement Accounts are a shadow of their former selves, and that vision of you on the beach sipping a pina co- lada has gotten pretty shadowy, too.
But don't despair. Take action.
Here's how to rebuild your future while the Feds bail out the big boys. You may even find some opportunities to build a better retirement in the current turmoil.
Stick with your plan. If you don't have a plan, get one. A professional adviser will know how you can capitalize on the current turmoil to rebalance your accounts, adjust your 401(k) contributions, and the like. He or she will also give you the willpower to avoid selling during panics. To find an adviser who will do a fee-only review, check the National Association of Personal Financial Advisors (www.napfa.org) or the Alliance of Cambridge Advisors (www. cambridgeadvisors.com).Shop for your retirement home now. Some of the most popular retirement spots have seen their real estate prices plunge. Meanwhile, mortgage rates are low. It's a decent time to be shopping for real estate. You can take your time and find what you want, a few years before you actually need it. Use it as a vacation home or rent it out. Use a Roth IRA. If your traditional IRA was beaten down, it might be a good time to convert it to a Roth IRA. You'll owe taxes on the tax-deferred amount you move into a Roth, but since that amount may be lower than it was a few months ago, your tax burden will be lower, too. Once the money is in a Roth IRA, you can enjoy the stock market recovery and know the money you earn in it, and pull out of it, won't be taxed. Invest extra. The less your money earns, the more money you need to stash for retirement. That means contributing the limit in your 401(k) and your IRA. For 2008, you can put $5,000 into an IRA. If you're 50 or older, you can throw in another $1,000. Investing now may seem hard; you've already lost what you invested during the first half of the year. But over the decades the money you invest now will grow for you.Trim your budget. To get the extra money you'll need to rebuild your retirement kitty, cut out today's extras. Look at your bank and credit card statements and evaluate where those discretionary dollars are going. Be honest with yourself. Expect to work longer. When you delay retirement, you allow your retirement money to grow longer without taking withdrawals. You increase the size of your monthly Social Security benefit check. And you lengthen the period when you can continue to put money into your retirement plans. Be calm. The happiest retirees are not the most wealthy or the most idle. Linda Stern is a freelance writer. She can be reached at lindastern@aol.com. 
© Copyright 2008 Globe Newspaper Company.
