Middle-aged investors

If retirement is getting closer

If you are in your 40s or 50s, your retirement savings might have been badly bruised by the market crash. That's particularly likely if you had too much of your money in stocks, relatively speaking, and not enough in bonds.

How long will it take you to recoup your losses? That depends both on how well the market does in the next decade and on how much you continue to contribute. Jack VanDerhei, research director at EBRI, did some calculations for a report: If the market returns 5 percent annually, the bulk of older workers will need somewhere between two and five years to recover. But what if the market is flat for a few years? Then it could take 2½ to 10 years.

It's easy to tell people to contribute more to their retirement plans, VanDerhei notes, but for many that's not a possibility. "Most people are just not in a situation today—or anytime—that they can afford to increase [their] contribution," he says.

The alternative VanDerhei sees for many people is delaying retirement. Postponing by even a few years might seem like forever when you are eager to retire. But the payoff can be significant. For one thing, you will increase your monthly Social Security benefit for every year you delay, up to age 70. You might also see the value of your investments and home recover at least somewhat from the recent downturn. You'll also be buying more time to invest for retirement.

It might also be tempting to put more of your money in stocks, hoping for a rally to make up for your losses. But that's a big gamble. As evidence, VanDerhei calculates that at least 40 percent of the near-retirement crowd would have fared much better with target-¬date retirement funds, which would have trimmed their stock holdings by at least 20 percent.

No matter how daunting the task of saving for retirement might seem, the worst thing to do is ignore the problem. Time is still on your side, and whatever you can save now will almost certainly help you later.