retirement

Crisis' effect is all about life stage

Some financial advisers point out that while it may be a good time to buy stocks for the long haul, fear often drives many out of the market. Anna Ibrahim, an Ameriprise financial adviser, says many of her clients are rebalancing their portfolios. She is finding that some in their late 40s and 50s are confused while those in their 30s to mid-40s are calling in to find out how they can reallocate and take advantage of the current market. For those in the middle of their working years, it's tempting to run for cover but, she says, it still makes sense to invest more money at a time when stock prices are at historical lows. Ibrahim recommends investors take a long-term view, do their homework and look for undervalued companies.

"It's all about time. Some (investors) with 15 years to go just aren't opening their statements and (have faith) that it will come back, but others are starting to get the message that this is a huge opportunity that may not come back for a very long time," says Ibrahim.

A golden goose on the loose for youth
For those in their 20s or 30s, the current economic conditions might be more of a blessing than a bust. The stock prices of many rock solid, cash-rich and profitable companies have been hit hard in the downturn despite the fact that their businesses and financials haven't changed. Companies such as Exxon-Mobil, Microsoft, Apple and General Electric have fallen well off of their 52-week highs and now have very low price-to-earnings ratios. That means the stocks are considered bargains and can be very attractive for those willing to buy and ride out the storm.

Ben Rosenzweig, a 26-year-old from Detroit, says he's unconcerned about the recent market declines. With more than 30 years until retirement, he understands what he calls the "roller coaster" of investing. Rosenzweig hasn't changed his investment plan, utilizes dollar cost averaging and says that he is now buying his stocks at heavily discounted prices.

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"It scares a lot of people because most read the headlines, freak out and say they don't want to invest now. But to have it when it is going up, you have to buy it when it is down," says Rosenzweig.

Many Gen Xers and Yers have little confidence that Social Security will be there when they hit the magical age. Even if it is still around in 30 years, gradually declining benefits are expected to cover only 36.7 percent of the pre-retirement income of the average worker in 2030. That lack of faith in entitlement programs is actually a blessing, says Mari Adam, president of Adam Financial Associates in Boca Raton, Fla., because they are taking more control of their retirement planning.

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