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Retirement planning in the current economy

By Shirley J. Anderson-Porisch

House in Hands


May 13, 2009

The current economy has had financial impact on many aspects of family life including plans for retirement. No doubt, you have heard someone say, “I don’t even want to look at how much money I’ve lost in my retirement fund.”

Even though “looking” may be difficult, everyone should stay aware of their retirement funding status and take the action steps needed to achieve their long-term retirement goals. Workplace funds may have changed but are still an important asset. Participation in these programs, especially when there is an employer match, is like free money. As many have said, the market will turn around, so don’t panic and stay with the program.

So what retirement actions are necessary? Determine the amount of money that will be needed for retirement based on accumulated wealth, growth rate of invested dollars including workplace retirement funds; number of years between now and retirement; amount of income needed during retirement; as well as the number of years one plans to be retired. Having an updated personal net worth statement is a good place to start this determination.

The net worth statement compares assets and liabilities. The difference is net worth. Current assets are listed as actual or estimated fair market value and usually include cash in saving and checking accounts; cash value of insurance policies, home, personal property, real estate investments, business interests, stocks, bonds, CDs, IRAs, annuities, and more. Current liabilities listed as short- and long-term include home mortgages, home equity loans, credit card balances and other creditors to which money is owed.

Determining how much money will be needed in retirement starts with knowing how much you spend. Update your monthly spending plan of expenses for savings, housing, transportation, health, food, payments, and recreation. Determine whether you will need to spend that much when you are living on a retirement income. And if you plan to have less income during retirement, try to identify spending changes.

Ideally, when close to retirement, a net worth asset list should be longer than the liability list because retirement income is often less than pre-retirement income. Many financial professionals will suggest paying off a home mortgage before retirement. Paying off the mortgage before retirement may be a new goal given the current economy.

The workplace human resource or benefits department can help determine the time between now and retirement. Make sure to be aware of all options, especially if you qualify for retirement. People make their most positive choice when all needed information is gathered.

Make your best estimate for how long you plan to be retired, because long-term planning is still the key, even in this economy.


Shirley Anderson-Porisch works as a family resource management Extension educator at the University of Minnesota and is an expert in family finance. She has long been a media contributor and is an accredited financial counselor.

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