Friday, September 25, 2009

Fuzzy math: it's the cloud in our retirement savings silver lining

I'm expecting good news when my next retirement account statement hits the mail box.

My retirement savings, which were evaporating by $7,000 a day during the worst of last year's meltdown, have grown back more than $40,000 since then, according to what I've seen following the portfolio online. We'll get the official word after the third quarter closes next week.

Whoopee, right? Not so much. It's tempting to think that if you lose, say, 30 percent of your portfolio when markets fall, you make the money back when they rebound 30 percent later. The reality is your investment need to grow twice as much, or 60 percent in this case, just to break even, says Investopedia contributor Doug Rice. He does the math here.

There aren't any shortcuts back up the hill either, reports Michael Maiello at He lists 11 you want to avoid. Meanwhile, contributor Marc Alexander lists some basic strategies you can follow. Basically you work harder and save more.

But there may be good news too. columnist Steven Goldberg reexamines some past recession market statistics and finds recovery may come faster than forecasters commonly think.

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