Oct 13, 2008 6:12 pm US/Pacific
Financial Advisor Gives Age-Based 401K Advice
What to do in your 20s, 30s, 40s, 50s
Reporting
Sue Kwon
SAN FRANCISCO (CBS 5) ―
In a down market, the natural thing to want to do is pull everything out of the stock market and wait for a recovery. But, depending on your age, that could be a bad idea.
Darryl Coe was out earning a few dollars performing with his German music box at Fisherman's Wharf Monday. The retired airline mechanic lost a huge chunk of his retirement savings in the recent stock market slide.
"My 401K has gone way down," said Coe. "I lost about $80,000 to $100,000. But I'm out making money now and I'm not at home thinking about it."
But a lot of people are thinking about it. Kevin Dorwin is a principal financial advisor with Bingham Osborn & Scarborough. He has been on the phone all weekend with clients. He's answering questions and telling them age should determine how they approach their 401K retirement accounts.
He said investors in their 20s are the biggest winners in recent stock market losses.
"They are buying stock at much lower prices than a year ago and right where they were 10 years ago. So, they should be happy," said Dorwin.
For Generation X, or people in their 30's, it's different.
"This decade hasn't been a great one for people in their 30s. They haven't earned a lot of money on their investments and they are discouraged at this point, but you shouldn't be discouraged because you have peak earning years ahead," said Dorwin.
So, he says they should keep their portfolios weighed heavier in stocks.
But For 40 and 50 somethings, "They have seen a massive rise and then two periods where the market has done poorly in this decade alone. You should have some fixed income or stable investments so you can cushion your portfolio," he said.
For boomers nearing retirement here's the news many may not want to hear.
"It can be beneficial to work that extra year or two," said Dorwin. "It can help your overall retirement plan if you are not withdrawing from retirement at the same time stocks are down."
Coe doesn't need to dip into his 401K quite yet, but he is going back to work.
"This is the first day and I have am having a good time and I'm making a little money," he said.
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