Planning, care helps retirees in recession

Even so, those who did felt flickers of self-doubt when the stock market crumbled around the time they banked their final paychecks.

Stocks had already fallen nearly 20 percent from their peak when Bill Cichanski of Tacoma, Wash., walked away from his job as a structural engineer in June 2008. The market crisis that erupted weeks later eroded much more of his savings.

"I was nervous,” admits the 65-year-old Cichanski, who had painstakingly built up his holdings to more than $1 million. "But I was still quite comfortable with my decision to retire. I wasn’t panicked.”

Thanks to his financial preparations for retirement, he has been enjoying himself, hiking in the Cascades with his wife Amanda, doing photography and fishing.

Many older workers have resigned themselves to delaying retirement indefinitely since the downturn that exposed their financial vulnerabilities. But some were able to stick to their timetables.

It doesn’t have to be a complex plan, especially if you’re under 50. The key in earlier years is simply to set aside as much income as possible for the future. As you move into your 50s and 60s, though, specific plans should take shape.

Most don’t sock away enough. The personal savings rate had fallen steadily since the 1980s before rising recently, reaching a still-modest 4.9 percent in the second quarter. And the average person investing in an employer-sponsored defined contribution plan like a 401(k) puts aside only about 6 percent of pay, according to the Profit Sharing/401k Council of America.

Those who are most successful in retirement generally put together a budget well in advance based on their likely expenses and income and with the flexibility to cut spending if need be. Only 43 percent of Americans have calculated how much they need to save for retirement, according to the Labor Department.

"It’s never too soon to do a retirement budget — people in their 20s could do it,” says Chad Terry, director of retirement solutions for Principal Financial, a Des Moines, Iowa-based retirement and financial services company. "But it becomes far more critical 10 years before retirement.”

Cichanski didn’t come up with a retirement plan until 50, spurred by a divorce. He had less than $200,000.

With a financial planner, he put assets in a portfolio that included an Individual Retirement Account, mutual funds and bonds and set a goal of 2008 to retire.

It was a conservative strategy, not relying heavily on stocks or ambitious annual returns. That helped the plan weather two market crashes and enabled him to retire on schedule.

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