Protecting Your Nest Egg in a Recession

[swsop]

Anyone nearing retirement is old enough to remember the recession of 2001.
While the experts were debating whether the country really was in a recession -- and if so, when it would bottom out and when the recovery would start -- your portfolio was probably losing value.

It's rotten enough to see your nest egg decimated when you have 10, 20 or more years for it to recover. But millions of Americans on the cusp of retirement experienced the devastating effect of a recession on their portfolios just prior to, or shortly into, their retirements.

Now, six years later, the news is peppered with stories of a slowing economy and talk of a possible recession. If retirement is in your near future, or even if it's years off, consider taking steps to protect your assets against a potential downdraft in the stock market.

http://finance.yahoo.com/focus-reti...Egg-in-a-Recession?mod=retirement-preparation
Swsop

 

[Show-me]

Amen!

 

[alevin]

Borrowing against retirement funds for everyday current expenses: It's happening. I knew people were maxing out credit cards, now they are borrowing against their retirement stashes to keep up with the credit card payments. Does not bode well for coming decades in the market, or for society in general either. Maybe my friend and insurance agent has the right idea after all, forget the market, buy rental properties for retirement, or at least broadly diversify income sources. Pyriel has been incredibly quiet the last number of months....

http://www.cnn.com/2008/LIVING/personal/02/20/borrowing.retirement.ap/index.html

 

[Silverbird]

And in defense of TSP, you can still get matching while you are paying back your loans. A lot of 401Ks make you stop contributions when you take out a loan.

Also another bad credit note: with falling house prices, loan companies are re-calculating home equity account amounts. People who thought they still had money to borrow off of their house to pay for those credit cards got an unpleasant surprise.

 

[ChemEng]

A lot of 401Ks make you stop contributions when you take out a loan.

Can anyone attest if this is true with TSP?

 

[FUTURESTRADER]

not true for TSP...I've been contributing various %s over the years and have been paying back TSP loans simultaneously

 

[Silverbird]

sorry I wasn't clear. TSP indeed allows you to pay off your loans and contribute at the same time. I'm doing it now (residential loan).
:embarrest:

 

[logdoc]

Anyone nearing retirement is old enough to remember the recession of 2001.
While the experts were debating whether the country really was in a recession -- and if so, when it would bottom out and when the recovery would start -- your portfolio was probably losing value.

It's rotten enough to see your nest egg decimated when you have 10, 20 or more years for it to recover. But millions of Americans on the cusp of retirement experienced the devastating effect of a recession on their portfolios just prior to, or shortly into, their retirements.

Now, six years later, the news is peppered with stories of a slowing economy and talk of a possible recession. If retirement is in your near future, or even if it's years off, consider taking steps to protect your assets against a potential downdraft in the stock market.


http://finance.yahoo.com/focus-reti...Egg-in-a-Recession?mod=retirement-preparation
Swsop

Thanks for this post, with less than5 mo till retirement I have been fortunate to jump into the G in October of 07 and have avoided the slaughter of the past 4 months but haven't figured what to do with my other assets that have been in money markets since then as well. This helps my thinking. I can't rely on the G funds and my combo CSRS/FERS annuity only for income. And the lst thing I wanted to do was look for another job to fill in for the missing income from my lower producing TSP account.

 

[Hallatauer]

Also another bad credit note: with falling house prices, loan companies are re-calculating home equity account amounts. People who thought they still had money to borrow off of their house to pay for those credit cards got an unpleasant surprise.

Something I've gotten my wife to say... my mantra when it comes to credit cards... "Charge and pay off in full every month". If you can't, then have a plan, if you don't have a plan, don't buy it.

I have only two outstanding loan debts. My mortgage and a home equity loan that was used to buy retirement property. Together they equal less than 50% of what my home and property are worth.