A Plan for Growth and Income; Despite the Downturn, Planners Say Stocks Should Figure Large in the Equation
How should new retirees invest their savings so they get the income they need to help support them during a 15- or 20-year retirement?</br></br>That advice may sound a bit crazy, given the huge losses that so many stocks, including mine, have suffered during the past 12 months. Looking at the carnage on Wall Street, new retirees may wonder why anyone would tell them to get deeply involved in stocks. But that is precisely what some financial advisers suggest.</br></br>The reason, of course, is that the advisers are not reacting to what the stock market is doing at the moment; they're talking about what the market is going to do in the next 15 or 20 years. History is clear on this point. Sooner or later, stocks will recover and prices will rise. When that happens, stocks will again generate the gains that retired investors need for their long-term financial health.</br></br>Of course, for older retirees who invest in stocks, it's hard not to worry. Thus far, my stock losses are still on paper. But I will admit that, at the age of 74, it is pretty scary to realize that if I had to sell some of my battered stocks anytime soon, my paper losses would become actual losses.</br></br>I sometimes wonder if I should dump my stocks and flee to bonds. However, experience has taught me that it would be a bad idea. When you sell at the bottom, you lock in your losses. And then, when the market turns around and those stocks go back up, you no longer own them and you don't get any of the gains. So you lose both ways.