Yikes! Look at my retirement account

Highway sign with the words Retirement-Next Exit

If you just can't bear to open the statement arriving from your retirement account, don't.

Got a shredder? Use it.

It's better to do that than let the losses you almost certainly suffered over the past several months in the stock market push you into decisions that you'll regret in a few years. Maybe even a few months.

Yes, the numbers are going to be bad.

There have been 10 bear markets since the 1930s, averaging about 16 months from peak to trough and pushing stock prices down an average of 31%.

So far, this bear market is 12 months old and the third-worst we've seen, with losses exceeding 40% at the low point on Oct. 10.

The Congressional Budget Office says Americans' retirement plans have lost $2 trillion.

But this is not the time to dump all of your stocks and mutual funds and flee to the safety of Treasury bills and certificates of deposit.

In the long run, you'll lose.

Reason 1. The market will recover, and you don't want to miss the rebound.

You've got to remember the first rule of building wealth: Buy low. Sell high.

Yank your money out now, and you're turning that age-old wisdom on its head.

You won't be able to recoup those losses and rebuild your savings if your money is out of the market when it turns around.

"Through the darkest episodes of financial history -- the Great Depression, periods in World War II, the oil crunch in the 1970s, the 1987 stock market crash, the bursting of the tech bubble -- always and every time, things have bounced back," says Dan Caplinger, senior analyst at Motley Fool. "People have looked back at these periods and say, 'Boy, if I'd had the guts to put my money in then, I'd be a lot richer today.' "

The markets are often relatively flat for long periods. When they go up (or down), they usually do so very quickly. If you miss just a day or two of big gains, you miss most of the money-making opportunities.

A study by Vanguard, for example, found that anyone who bought $10,000 worth of stocks in January 1993 would have had $44,680 by the end of December 2007 if their investment simply tracked the Standard & Poor's 500 Index and the money was in the market the entire time.

But if they missed the market's 10 best days over those 11 years, the account would total only $27,840 -- or $16,840 less.

Reason 2. 3% is not enough.

You'll never save enough money for retirement if you put it in Treasury bills and certificates of deposit.

Yes, they're safe, but 3% returns won't even keep up with inflation.

Most of us need to earn an average of 8% a year on our savings to build a substantial nest egg, and the only place consistently offering that kind of return is the stock market.

Run the numbers yourself using our savings calculator. You'll see what we mean.

That doesn't mean you're guaranteed to succeed if you keep your savings in the market.

But you're almost certain to fail if you put all of your money in Treasuries and CDs and don't take advantage of the market's long-term gains.

It's the risk everyone must take in the age of do-it-yourself retirement.

Even if you're retiring soon, you don't need to have a fire sale.

"Build a cash-flow strategy for a five- or 10-year period of time that would preclude having to sell any equity assets or any assets that are distressed at the time," says John Burns, a principal in Burns Advisory Group in Oklahoma City.

In other words, sell as little of your stock or mutual fund holdings as possible. Use other sources of income to cover your expenses until the market recovers.

"For people retiring tomorrow, you're only going to need a certain amount of your retirement savings in the immediate future," says Caplinger. If you live another 20 years after the day you retire, you're still on a long-term savings plan. Liquidate what you need and let the rest keep growing.

"You really can afford to wait it out," he adds.

If you haven't started a 401(k) or IRA yet, don't wait.

The best way to make money on investing is to buy low and sell high. This is definitely a low.

"Hand over fist, get it in," says Caplinger. "This is a generation event. It's one of those once-in-a-few-decade opportunities."

If your company offers a 401(k), start it, use it and throw in what you can, especially if your company matches your contributions.

If your company doesn't offer a 401(k), open an IRA or Roth IRA and start putting in what you can.

Our "7 simple rules for a successful 401(k)" and "6 simple rules for a successful IRA" can get you started.

"People look at what markets are doing today and think it's a riskier place to invest. But as prices come down, the markets actually become less risky," Burns says.

Why? Because you have less to lose and more to gain.

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