Even as consumers wrestle with new concerns after enduring this year's plummeting home prices, failing banks and plunging markets, they're finding opportunities to rebuild the wealth they lost.
It won't be an easy recovery for most of us, but financial planners say that a little flexibility about your saving, spending and retirement plans will go a long way. Here are some strategies for recovery in five key areas of your financial life.
| More from SmartMoney.com:|
• Make the Most of Today's Low Interest Mortgage Rates
Here's How to Double Your Nest Egg
• 10 Things Your Bank Won't Tell You
The market crash has erased more than $3 trillion in retirement savings in 2008. But working a little past your planned retirement date can go a long way toward repairing the damage.
For every extra year of work, retirement income from Social Security and investment returns can rise as much as 6.4%. Social Security benefits are less generous if you take them before full retirement age, but you get a bonus for every year you wait after that.
While you're working, you also can save more: About 22% of companies offer Roth 401(k)s, which let you contribute up to $15,500 a year ($20,500 if you're over 50) in addition to whatever you're putting into your IRA or normal 401(k). Current retirees might consider part-time work, especially if benefits aren't an issue, or full-time jobs if benefits like health care do matter, says Emily Allen, assistant director of work-force programs at the AARP Foundation.
Plan to pay more for health care, too. Medicare premiums are rising rapidly. Hewitt Associates, a benefits consulting firm, projects that health-care costs will rise almost 9% in 2009. Basically, long-term care insurance is a must. Visit AARP.com for sample plans.
History shows that the best way to rebuild portfolios is to stay in the stock market. Over the past nine recessions, the Standard & Poor's 500-stock index has gained 13%, on average, during the second half of a downturn and another 13% the year after it ended.
"This is likely to be one of the best buying opportunities, if not in the last decade, then in the last century," says financial planner Harold Evensky.
Strategists favor cash-rich blue chips in defensive sectors like consumer staples and health care, and technology giants. Exposure abroad also will be crucial to rebuilding wealth. Among foreign markets to watch, veteran global managers cite Japan, China, Brazil and parts of Europe outside the U.K. and Spain. (Both of these countries face their own real-estate woes.)
But it's worth keeping a portion of your portfolio in cash and bonds just in case; planners such as Mr. Evensky are keeping at least 15% in cash for their clients. For now, limit bond exposure to shorter-term, high-quality issues.
Additionally, you can ward off inflation concerns, which many economists expect will re-emerge in a year or two, by purchasing Treasury Inflation-Protected Securities, or TIPS.
Since risky debt sank Wall Street, lending standards have tightened significantly. So if you are planning to take out, say, a mortgage or college loan, protecting your credit score is key: Pay bills on time, keep card balances low and monitor your credit report for mistakes.
Even little steps like doing without a department-store charge card can help, since a couple of credit-score points may mean thousands of dollars in savings.
Don't have time to improve your credit rating? Look into credit unions. These lenders are more inclined to look past your credit score to see whether other circumstances, like job history and other assets, make you creditworthy.
| More from Yahoo! Finance: |
• In Lean Times, Online Coupons Catching On
• Million-Dollar Giveaways: A Trend of the Times
• Stave Off the Ever-Circling Credit Crunch
Visit the Banking & Budgeting Center
If circumstances are forcing you to move, don't sell your home; rent it. Average rental prices are at an all-time high, according to a recent study by the Harvard Joint Center for Housing Studies. In part, that's because families forced out of their homes need some place to live -- the number of renter households jumped by more than one million last year.
It's currently 10% to 15% cheaper to own a home than to rent in most parts of the country, concludes a separate study by Columbia University professor Chris Mayer. So leasing out your old house can keep you from taking as big a loss.
National chains such as Home Depot and Best Buy are increasingly willing to bargain with consumers. Negotiating also can save hundreds of dollars on gyms, cellphone plans and rental cars, and thousands of dollars on a new car.
You can often get a room upgrade, free parking or free gym passes in hotels "just by asking," says Travelocity spokesman Joel Frey.
Even haggling with doctors yields a rate cut about two-thirds of the time, according to a recent survey by pollsters Harris Interactive.
Standard strategies still hold: offering cash, knowing what the competition is charging and keeping track of product cycles. (Cars, for example, are most deeply discounted at the end of the model year and during January and February.)
And if you can't get what you want, ask for something else: If a rental-car company won't give you a better rate, it will often give you a better car for the same price.