Your Guaranteed Nest Egg Isn't So Secure Anymore. Now What?

In the local paper earlier this week, I read that Twin Cities home prices have fallen over 35% since their peak in the summer of 2006. This drop in Minneapolis-St. Paul real estate values was according to the latest report from the national real estate database www.zillow.com.

This dramatic drop in market values immediately reminded me of a similar decline in the major stock market averages a few years ago. The S&P 500 fell over 49% in the period between June 10, 2008 and March 6, 2009.

I think it is a true statement of fact that a home and a 401(k) retirement plan account are the two largest financial assets that the average person will own in his or her lifetime.

In the “good old days” equity in a home and the steady growth in value of company retirement plan account were intended to provide with the majority of your retirement savings. The sad truth is that in today’s historic economic and financial market volatility, an average homeowner and 401(k) investor can’t count on either asset to provide a guaranteed retirement nest egg.

I don’t have any great insight on how to keep a real estate investment from declining every few years, but I can speak with authority on how to preserve both the principal value and annual contributions in a company 401(k) or 403(b) retirement plan.

Most everything in life is cyclical, including home values and stock market prices. Avoiding large retirement plan losses every few years is possible, but it requires a logical, organized and disciplined investment risk-management strategy.

Many times an individual company retirement plan participant is not aware of the outside resources available to them to avoid the every-few-years stock market downturn. Preserving your retirement plan account value principal in the early stages of the next stock market down cycle can have a huge impact on your eventual company retirement plan nest egg.

If you are concerned about your own ability to make the necessary on-going investment management decisions in your company retirement plan, look for a qualified, independent, fee-based advisor who has experience in advising other company retirement plan participants.

Are you concerned about another stock market collapse like the one from Summer 2008 to Spring 2009 reducing your company retirement plan account value?

If so, let me know what your specific concerns are.

Ric Lager
Lager & Company, Inc.