Retirement Saving In Recession: It Still Makes Sense

No one is going to argue that times are tough these days. Most people need to stretch their dollars as much as possible to squeeze in all of the necessities. Wages have been largely stagnant for the better part of the last decade, meaning that there are fewer discretionary dollars available for spending.

There's no law that requires you to save for retirement, though many employers now require participation at some level in company-sponsored retirement savings plans. Most companies that have a 401(k) plan offer some kind of matching incentive. In the past year, some big-name corporations have suspended their 401(k) matching grants, but in all 99% of companies that were matching last year at this time are still matching this year.

Under the circumstances, should you continue to save for retirement? Probably. Most 401(k) investments are based in stocks or a mixture of stocks and bonds. Historically, the stock market has risen in value over time. At the moment, the decrease in the value of retirement funds and investments may mean a loss for your past investments, but also represents an opportunity to buy investment-grade securities effectively at a discount.

Moreover, your only opportunity to save for retirement is during your working years. Ideally, you should start saving while you're in your prime. If you need to slow down at work as you get older, or experience health or other issues that prevent you from working to your full potential, your retirement savings will continue to work and generate income for you.

If you wait until you're in your mid-30's, 40's or later to start saving for retirement, the likelihood that you'll be able to amass enough cash to carry you through your retirement is slim. Regardless of the state of the economy, you should continue to save for retirement no matter what the economic circumstances are and how much you can put away. Something is always better than nothing.

One caveat: consider creating a broad retirement portfolio that includes a mixture of tax-deferred and taxed assets. One thing you'll want to avoid is being completely dependent on tax-deferred retirement assets. If you maintain some portion of retirement assets that are taxed, you'll have more choices available to you if you need to retire early or withdraw the money for some other reason.

Can You Stop Foreclosure?

If you're a homeowner in financial trouble, and your mortgage is one of the many that will slip into foreclosure this year, you may be looking at strategies to stop the foreclosure process. There are just a few ways to stop foreclosure, but the process is stoppable, sometimes even after a house has been sold.

The most effective way to stop foreclosure is to bring your mortgage payments current. The bank cannot foreclose on a mortgage in good standing, so bringing your payments current is a sure-fire strategy to stop foreclosure. Unfortunately, if you're experiencing unresolved financial troubles, this may not be possible. The loss of a job, a reduction in income or an increase in the amount of the mortgage payment may put your house out of financial reach for you. Before letting your house slip into foreclosure, talk to the mortgage holder to see if they can offer some type of modification that will make paying your mortgage easier.

Another way to stop foreclosures is to sell the property. The sale of the property will satisfy your obligation to the bank, provided that the sale price is sufficient to cover the amount owed. In today's tight real estate market, getting your asking price for a property can be tough, and in some cases downright impossible. If you're "upside down" on your mortgage – that is, you owe more than the property is worth – a short sale may provide you with an opportunity to sell the property at a reduced price and receive some loan forgiveness from the mortgage holder. There are many intricacies to negotiating a short sale, so you'll want to consult an expert if this is the route you plan to take.

Bankruptcy will also temporarily halt a foreclosure proceeding, but declaring bankruptcy to avoid foreclosure is a clear-cut case of jumping out of the frying pan and into the fire. When everything is said and done, the bankruptcy court can still order the sale of your home under certain circumstances, so keeping your home in bankruptcy isn't a given.

After the lender has foreclosed on a home, most states permit the homeowner to "redeem" or reclaim the property for a certain period of time. Only a few states have "strict foreclosure" rules that don't permit redemption. The redemption period varies by state, but if your lender has foreclosed on your property, and you can come up with all of the money you owe, you can reclaim ownership on the property. Redemptions can and do happen, but most homeowners don't redeem foreclosed properties.