Wednesday, Mar. 03, 2010

Rethink — and Restore — Your Retirement Dreams

Your retirement plan probably looks different than it did a few years ago. Yet things aren't as awful as you might imagine. We've turned the corner on some key financial fronts, and it's both safe and smart to start thinking about your golden years again.

For one thing, the recession almost certainly ended months ago. The recovery has been shaky, but make no mistake: it has begun. Meanwhile, 4 in 5 companies that scaled back their 401(k) plans during the downturn say they will restore benefits this year, Hewitt Associates reports. And Americans have a healthier attitude about money in general — they have tripled their easily accessed cash holdings and, duly chastened, will save another $700 billion a year over the next 10 years, estimates financial firm Allianz. That equates to a breathtaking annual savings rate of 6%, compared with the pre-recession norm of less than 2%.

Perhaps the best news of all: your decimated savings aren't quite so decimated anymore — at least not if you hung in there and enjoyed the early part of the market rebound. The average 401(k) balance rose 28% last year, reports Fidelity Investments.

It's still tough out there, no doubt. Only a third of the $17.5 trillion in lost financial and real estate assets have been recovered, Allianz says. A record 6 million Americans have been out of work six months or longer, and the unemployment rate is expected to hover just beneath 10% for the rest of the year. But the green shoots of recovery are pushing through. You survived; now get back to the business of planning your life. It isn't enough to simply tend to your 401(k) and pray for Social Security. Here are 10 ways you can rethink — and restore — your retirement dreams: