Your 401K: Is the Stock Market on the Road to Recovery?

Watching the stock market this past year has been like a frightening roller coaster ride - a ride that has devastated the retirement accounts that Mainers have worked so hard to build.

The Dow Jones hit a record high in October of 2007. It hit 14,164 points. The low point during this recession came in March of 2009 when the Dow hit 6,547. It hit the 10,000 point mark last month.

Experts say the 10,000 point mark does not necessarily mean we are on the road to recovery. Gerard Cassidy of RBC Capital Markets in Portland says 10,000 is a psychological mark only and the real indicator of when the economy is turning around is jobs. Cassidy fears it could be months before the job market turns around as companies are waiting to see what happens with health care reform before they start hiring again.

Experts say before you retire, you should look at your savings and figure out what type of lifestyle you want to have in your retirement years. Experts say think carefully about the changes in your expenses. The good news is that you won't be supporting children anymore or have the expenses associated with working - like extra miles on your car and buying a work wardrobe. Your social security taxes will disappear and your income taxes will drop. Keep in mind, health care costs will likely rise.

Remember that if you plan on selling your home to make money, you may not get as much money as you had originally planned now that the housing market has tanked.

Experts say - on average - if your gross income working is $60,000, you should plan on having enough savings to have $47,000 to spend every year of your retirement to maintain your standard of living. If you make much less than $60,000, you probably saved less, therefore you'll likely need to have 85% of your working income coming in every year during retirement. If you make a lot more than $60,000, you should have 85% of your working income coming in every year during retirement as well because your expenses will be higher thanks to higher income taxes.

Experts say men need between 4-7 times their annual salary in the bank. Women need between 4.5-7.5 times their annual salary because women live longer. Your 401K: Is the Stock Market on the Road to Recovery?

Posted: Friday, November 6 2009, 10:56 AM EST