in many cases even the housing crash did not change things. if you were able to sell ,even at a lower price many of the popular retirement places crashed even worse so you may have still did better when you sold and re-bought.

a good pre-retirement plan should have had market corrections not effecting much either. one popular way of making sure that does not happen is by implementing a bucket system in advance or just plain old making sure if you are buying long term assets you buy time and the assets.

it is not the markets that dashed folks retirement plans but bad planning setting up for retirement.

being on the 401k committee at work i see fatal flaws made all the time.

folks continue to just throw money into equities funds as they get close to retirement with no plan for buying time in case things hit the crapper right before.

not being able to sell a home would be one of the few reasons that things could get delayed but then again that is a risk even in good times for real estate.

one recommended way to buy time is to set up 3 buckets a few years prior to retiring or thinking you will retire.

the amount of money you have doesn’t matter as it is all based on your own amount.

bucket one should hold as much as 15 years of withdrawals in safe money in cash instruments, cd’s or annuities. bucket 2 is bonds,income funds, income reits. bucket 3 is all your equites,commodities,reits etc.

regardless of what happens you have 15 years of withdrawals before you even have to think about selling equities to refill the buckets if you had to wait..

to date we never had a 15 year period ever where you could not have sold equities to raise cash at some point and made money.

having just finished structuring us like that before we dropped we watched the huge plunge more as a spectator than a participant .

that is not to say it didn’t bother us, it sure did but the fact was our plans would have been un-scathed if we decided to retire earlier.

there are quite a few ways to structure in pre-retirement to avoid having markets and rates destroy your plans.

you may want to cut spending back a bit if retired after a 40% fall in the equities bucket but things should hold up okay even if you didn’t.

there are and will be economic events that always will try to kill your plans off if you are not prepared.

prior to the big drop historically different parts of the country had rolling recessions instead of 1 master one. first the farmlands got hit, then the oil patch states ,then it was new england that got crushed, nyc got its share of grief in the late 1980’s when the market and real estate crashed .

markets and or real estate crashing is nothing new. the key is how you prepare for them.

the fact is not everyone can prepare. there are those who have their home as their piggy bank and no savings. if that is your case then you are no different than anyone else who takes all their dough and throws in the whims of the market, or throws it all in cash and gets burned by low rates.

you may have had no choice as it was either own a home or save but that doesn’t mean it won’t turn out a risky bet for you.

when you bet the ranch on only one outcome and hope it turns out okay when the time comes that is always a risk and should be avoided if you can.

hope is never a strategy.

Last edited by mathjak107; 03-03-2013 at 03:14 AM.