Posted September 30, 2008
What a wild week, and it's not over yet! My fellow Boomers and I are wondering about the impact to our retirement plans, in other words, will be able to??? My advice: calm down, retrieve your baseline Longevity Plan and take a look at it to assess the impact.

First take a look at the Expense side. If a government bailout goes through this week, your Taxes may increase, so plug that in. Then contact your financial advisor or check your portfolio online to assess the damage to your 401(k) or similar plans due to the stock market decline. Plug in that number on the Income side. Now you have a quantitative estimate of the impact.

In order to make up the difference, you will have to make adjustments on the Expense and/or Income side. On the Expense side of the equation, you may want to reconsider reducing some of the expense categories that you don't currently have in your plan. On the Income side, you will have to revisit the many options that you have for finding more income. The most obvious may be working longer than you planned (if that is possible). Another alternative is to save more money. You may want to also meet with your financial advisor to re-balance your portfolio especially if you are heavily weighted in stocks. Selling real estate is probably not such a good idea due to the down market, but if you have to money to invest in a foreclosed income property, it's an excellent time to buy and it will provide a continuing income source. Finally, you can reconsider selling other assets that you don't need.

As I recommend in the book, having a baseline Longevity Plan makes it easy to quickly assess the impact of economic and financial changes such as these, and can also provide some peace of mind.