| Dear Carrie: My husband and I are 60 and 55. We have been maxing out all retirement savings for decades, including post-tax IRA and regular savings. We have seen $1 million in savings shrink by 40 percent. What do you say to those of us who have lost as much as the rest of the market? We are very frustrated at our age and scared! -- Anne
Dear Anne: It's never easy to watch your hard-earned savings diminish during a market downturn. And since the recent decline -- the worst bear market in modern times with a 50-percent drop from October '07 through February '09 -- a lot of investors share your feelings. But in my opinion, one of the worst things is to let your frustration and concern lead you into making short-term decisions that may cause you even greater economic pain down the road. So, let's first look at what you're doing right, and then consider some positive signs and steps you can take to feel more confident about the future.
It's great that you've been maxing out your retirement savings. You're way ahead of the average American facing retirement, even with the losses you've sustained on paper. Of course seeing the losses is disheartening, but remember that, unless you've cashed out, those losses are unrealized. Yes, it will take time to recover -- there's no quick fix. The average recovery time for previous bear markets has been around six years.
 But history tells us that markets do recover and, in fact, there are many current signs of recovery. For instance, the housing market seems to be stabilizing, and as of this writing, the S&P 500 is up 50 percent from its March bottom. There are bound to be economic bumps ahead, but there are reasons to believe the worst is behind us.
WAYS TO GET BACK ON TRACK
The recent turmoil has generated much discussion about new rules for a new world of investing. But I believe the rules for this so-called new world look surprisingly like the old rules: know your risk tolerance, follow an asset allocation plan you're comfortable with and diversify.
Rather than giving in to your emotions, take a step back and re-examine your goals and approach to investing. By doing so, you'll see more clearly how to reposition your portfolio -- and maybe you'll even sleep better at night.
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