Chapter 2. Prepare for Whatever the Future Holds

Despite some recent gains in the stock market, portfolios remain badly wounded by events of the last couple of years. Jobs are still disappearing at a rapid rate, the recession remains a serious concern, and policymakers continue to implement unprecedented—and unprecedentedly expensive—solutions. No one knows how this is all going to turn out.

But, then, we never do. Life—and investing—are always uncertain. But in troubled times like these, you can take steps to situate yourself for whatever the long term will bring.

Yes, these are unsettled—even scary—economic times. But even within those financial clouds silver linings can be found, and action can be taken. Stocks experienced some of their most robust years ever in the midst of the Great Depression. After falling 86 percent at the outset, the market then surged 54 percent in 1933, 48 percent in 1935, and 34 percent in 1936.

So, particularly if you're young with decades before retirement, 2008 may have handed you a wonderful gift. That's because you can scoop up investments and houses at rock-bottom prices.

If you're 50 or older, you may need to work a few years longer than you planned. But that'll give you time to replenish your savings, delay claiming Social Security benefits until they're worth more later, and give your investments time to recover. And even if you're retired or about ready to retire, you can look at other steps, such as adjusting your withdrawal rate and maybe seeking ...

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