I recently heard someone make a wisecrack that the only two good financial positions these days are: Cash and Fetal.   

If you are a part of the human race, you are very aware that 2008 was a devastating year for investors. Now, there was a time when that wouldn’t have included most Americans. But that was then, this is now. Today’s investors aren't just the rich, Wall Street types. They are us.  Today most Americans are dependent on their own investment prowess to prepare for their futures. That means most retirees don’t have the old fashioned pension plans to fall back on. And those who do are becoming increasingly concerned that those “guaranteed” nets may not be there when they lean back.

As I speak to audiences around the country, I am seeing a lot of hurting people. If you have been hammered by recent market downturns, you aren’t alone. In 2008 the U.S. stock markets lost roughly 40 percent of their value. That’s the worst showing since the 1930’s. And, world-wide, many other markets did even worse. So, with this in mind, allow me to share a few of the basics. These are ideas you might want to consider to make this difficult time a little better.

1. Rethink retirement.  It wasn’t until about seventy-five years ago that most Americans ever considered the possibility of spending their final years doing nothing of consequence. But with the advent of the Social Security system and more and more entitlement thinking — Americans gradually began to believe that they deserved to retire. Of course, when Social Security began, on average, people were dead by age 67. So, retirement in those days was generally short and inexpensive. Not so today.

If you’re nearing the sacred retirement age, this may be a great time to get out of the box and rethink your entire plan. Why not keep working? Every extra day you work, you accomplish three very good things: 

1) Income for that day that you don’t have to take out of your retirement money;

2) Hopefully, a few extra dollars to throw into your retirement account; and...

3) Another day to allow you retirement fund to grow a little larger.

2. Maintain a cash reserve. Like they say, it’s great to grow your principle — but it’s most important to maintain your principle. Generally, as people get closer to retirement they prefer to have more liquid money. So if markets go further south, they have a reserve fund to fall back on. This cash fund helps avoid digging into stock funds at the worst possible moment.

3. Don’t overcompensate.  For some, the tendency is to put everything into cash — and depart the stock market entirely. While no one knows the future, this might not be the best plan — even if you are nearing retirement. Sure the markets could still fall much further. But, historically, stock investments have had significantly better long-term returns than cash. Even in retirement, it may make sense to consider leaving a portion of your money in stock-related investments. That way, if stocks return, you have the potential of achieving greater long-term returns.

4.  Avoid the get-rich-quick schemes. It never fails: when markets do nose dives, there are hustlers on every corner promising stellar returns. And, having just lost a lot or your investment money, it may be tempting to “roll the dice” and hope for a big return. This is a great way to make bad matters worse. Sure, it might pay off, but what if it doesn’t?  In times like these, steady hands and level heads are priceless commodities.

5.  Consider reducing your lifestyle earlier rather than later.  If your assets have dwindled significantly (as have mine) consider cutting back fast! What does this mean?  It means doing everything you can reasonably do to get rid of high-rate credit debt. Pay off those credit cards. (Remember, if you’re paying 14% on your credit card debt — paying it off is like getting a 14% return on your money!) 

Then, stop doing the non-essentials. This may not be the best time to go on expensive vacations or try out that new restaurant.  Presently, Bonnie and I have cut way back on all of our spending. We aren’t going on long trips as often. We are eating most of our meals at home. We’re spending more time in the evening playing Scramble than going to shows.

6. Don’t give up on the plan to move.  Granted, if you live in a $300,000 home, it is probably worth less than that right now. But, if you were already planning to move to a smaller, less costly home, this might still be the best time to do it. Why? Because, even though you may take less for your present home, the other house may be equally devalued. Thus, although you sell low; you may also get the benefit of buying low and reducing your overall costs.

7. Consider postponing your Social Security payouts.  If you were planning to begin pulling money out of Social Security before your fully qualified to take the full benefit, try to develop a plan that will allow you to earn enough income to avoid this in the meantime. Experts point out that if you wait until age 66 to begin Social Security withdrawals (instead of starting them at 62) you’ll increase your monthly income by roughly a third. Of course, as with all these thoughts, your situation is unique. Go to http://www.ssa.gov/ for more on Social Security, and consider talking to a qualified pro about your personal situation.

8. Finally, remember, we are God’s kids.  As the old song says, “This world is not our home, we’re only passing through.” Paul promised in Romans 8, that “all things work together for good to those who love the Lord and are called after His purpose.” This is a wonderful opportunity for Christians to witness to a worried world.  Despite the present circumstances, we know Who will win the final war.  This can be a time of victory!

Published February 16, 2009


Steve Diggs presents the No Debt No Sweat! Christian Money Management Seminar at churches and other venues nationwide. Visit Steve on the Web at www.stevediggs.com or call 615-834-3063. The author of several books, today Steve serves as a minister for the Antioch Church of Christ in Nashville. For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four children whom they have home schooled. The family lives in Brentwood, Tennessee.

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