Pre-Retirement Advice

Ask the Expert: Retirement Losses: What Now?

Unfortunately, you're hardly the only person closing in on retirement and sitting on big losses. A recent EBRI report shows that going into last year nearly 40% of people age 56 to 65 had more than 70% of their 401(k) accounts invested in equities, and almost 25% had more than 90% of their balance in stocks.

Wow. These are the people who will most likely need to sell at least some stocks in order to fund their retirement. I just want to point that out. When is this selling expected to begin? Or has it already begun?

What immediate next step should I be taking to recover my account value?

Your third option, and the one I recommend, is to revamp your retirement savings account so that it contains a blend of stocks, bonds and cash that is more appropriate for someone your age and proximity to retirement.

In other words, the immediate next step should be to sell stocks and move some of that money to bonds and cash. Interesting. I'm somehow not entirely convinced that selling stocks will help recover his account value at this point.

That being said, I have no solutions to his problem. I'm just trying to lose less than the next guy in this environment.

Gold and Economic Freedom - Alan Greenspan

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

If there can't even be a safe way to maintain wealth that you already have, then it stands to reason that there can't be a safe way to double it. I think investors have been finding that out the hard way for the last/lost decade.