For most people, 2008 was a very bad year.
Housing prices dropped while foreclosures skyrocketed. The unemployment rate went from less than 4.7 percent in October 2007 to 7.2 percent in December 2008. In September, the stock market plummeted to frightening lows, on the way to its nadir of March 2009.
Retirement savers watched in horror as their savings balances fell, their jobs went out from under them, and the value of their homes -- their biggest investment -- shrunk. Or worse yet, they lost their homes altogether.
Five years later, Fidelity Investments polled investors ages 25 years and older and found that while many of them suffered during the Great Recession, the majority -- 56 percent -- say they have moved beyond their fear and confusion and are again confident about their financial future, according to a new survey.
No doubt about it, the financial crisis hit anyone doing retirement planning hard. About 64 percent of those surveyed reported that during the crisis they were either scared or confused. Some 47 percent said their households lost significant assets, with an average loss of 34 percent at the lowest point. In 17 percent of households, the main breadwinners lost their jobs, and income dropped in 35 percent of households.
Today's news is much better. As the recovery has taken hold, some 42 percent surveyed told Fidelity they had increased their contribution rates to their retirement plans, and 72 percent said they have less personal debt than they did before the crisis began. Among the 49 percent who said they have built an emergency fund, 80 percent said they have a better understanding of their finances than they did before the crisis.
With the stock market at new highs, but other aspects of the economy like employment and housing still shaky, what's the next step? Ken Hevert, vice president for retirement products at Fidelity, advises retirement savers to concentrate on the fundamentals.
Make a plan. "You have to have a solid retirement plan. You have to know where your retirement income is going to come from," he says.
Prepare for uncertainty. Try to foresee potential problems -- like the need for long-term care. "Nothing can derail a retirement plan faster than an unforeseen financial setback," Hevert says.
Understand how you're invested. Try not to be overly conservative, Hevert advises. If you're invested in a Fidelity target-date fund and retirement is 20 years away, chances are the financial professionals have put 65 percent of your money in stocks. If retirement is right around the corner, the percentage in equities is probably closer to 30 percent. No matter who's managing your money, those percentages are a good yardstick.
Be tax smart. Use tax-efficient vehicles to save for retirement. Getting the maximum 401(k) or other match from your employer is fundamental, Hevert advises. As you get closer to retirement, figuring out the best way to spend your retirement savings is an equally important step.
Don't overlook guaranteed income. With the disappearance of old-fashioned defined benefit pensions and the shakiness of Social Security, it is smart to build in other predictable sources of regular income -- like an annuity.