Planning For Retirement at Any Age

If you're in your 20s, the path to retirement is as clear as ever. Sure, there are some bumps to maneuver: the job market is tough right now, and your near-term career advancement and earnings power may have been curbed by the recession and a whole bunch of under-saved 60-somethings staying at work longer to make ends meet. But these are short-term issues that will disappear in time. Meanwhile, your young age gives you plenty of time to prepare.

Best of all: the market carnage in recent years mostly missed you and your paltry bank account, and the decline in asset prices that has been so devastating to your elders has, for you, created a rare opportunity. The steep declines of recent years have set up a potentially long period of superior gains ahead — just as you are getting ready to start a regular savings program. (In your 20s? See five ways to put your retirement planning into high gear.)

Some of the most profitable periods in market history have sprung from times like this; in the throes of a brutal recession and after a long lackluster period for stocks. Why? For one thing, markets are forward looking; stock prices start to rise as the market anticipates the recession's end. Such an inflection point may have been reached last March.

Beyond that, though, stocks have been dead money for more than 10 years. Such periods of underperformance are always followed by periods of outperformance (that, of course, is how we get average performance), and these waves can last for decades. While there is no way to know if the market's recent gains (up more than 50% in the last seven months) is the start of something long lasting, you can be certain that the odds of a long rebound are improving. And with 40-plus years before you retire you know you'll catch the next wave whenever it occurs — if you get started saving now. Here's how to make sure you have a decent nest egg when you turn 65: