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Your stock market, money questions — answered!

CNBC correspondent Sharon Epperson, author of 'The Big Payoff,' answers  viewers' questions on the housing market, home loans, retirement investments and more.
/ Source: TODAY

Has the stock market's recent volatility left you worried about your investments? Is your adjustable rate mortgage about to reset and you’re unsure about what to do with your home loan? Concerned about what effect the unsteady housing market has on your plans to buy or sell a home? Wondering what to do with your retirement investments? CNBC correspondent Sharon Epperson, author of The Big Payoff, has some answers to viewers questions:  

Reassessing retirement savings Q: I have been investing 25% of my pretax income into my retirement and have contributed to IRAs in an effort to make up for a late start in retirement investing. I have $101,500 in a 401K and $26,400 in IRAs, with about 85% in stocks (85% large cap/15% small cap funds). The rest is invested in bonds and short term holdings. I am 48 years old and hope to retire at 65. My current elections to my 401K are 90% stocks. Should I make changes to my holdings and/or elections with the down turn in the market or just try to ride it out.- Leslie, West Palm Beach, FL A: Pat yourself on the back! You’ve amassed more retirement savings than the average upper middle income worker. You didn’t tell me your annual salary, but by most calculations you’re doing pretty well compared to many of your peers. The Federal Reserve Survey of Consumer Finances found that workers between the ages of 45 and 54, earning $70,157 a year, had $90,937 in retirement savings on average. You’ve beaten the average, which is great. Stay on the path. “Even though you want to retire at 65, you’re really investing for the next 40 years of your life,” says financial advisor Charles Massimo of CJM Fiscal Management in Garden City, NY. His only suggestion: Make sure you diversify your stock mutual funds between U.S. and international stock funds. About 30-40% of a well-diversified portfolio should be in international stock funds, Massimo says.   Q: My current investments are not performing as I was lead to believe they would. My financial advisor has let us down so we looked to switch. We have been told it will cost $75 to $100 per fund investment to opt out plus the fees to invest in the new company. Any suggestions how to make a change without losing more money? -Rose, Topsham, Maine A: Take a deep breath, sit back and reassess your financial plan. Don’t let emotions rule your decision to pull your money out of mutual funds that may not have performed as well as you’d hope this week, this month or this year. If you determine that you can’t stomach the risk or truly are not pleased with a fund’s performance, first see if you can switch into another fund within the same fund company. There may be other funds in the fund company that will do well and you won’t have to pay a penalty for making the switch. If you decide you must change brokers, you will probably have to pay a transfer or account closing fee. Interview at least 3 brokers or financial advisors before making the switch. Get references from each of them and talk to those clients. You want to try to make sure you’re going to get the appropriate advice this time around.   Drowning in mortgage debt Q: Our adjustable rate mortgage is about to reset. We have been trying to refinance. But, our appraisal on our home has decreased $9,000 from last year. So, now we are upside down on our mortgage loan. We waited 7 years to buy our home, now we could possibly lose it. We've been here for just 3 years we have no control over the market decreasing, we need help.-No name, Loveland, CO

A: There’s no easy solution here. You’re definitely in a tight bind. When you’re “upside down” on your home loan, meaning the market value of the home is less than the debt against the home, “lenders are going to run the other way,” says Greg McBride, senior financial analyst at Bankrate.com. You’re going to have to ride out the storm and that means trying to meet the higher mortgage payment. - Cut back on your household expenses - Get a second job to boost your income- Start stashing away money now in a high-yield savings account to help you handle the increased payments until you are able to refinance

Unfortunately, says McBride, you probably won’t be able to refinance until the mortgage balance is less than the appraised value of your home.

Right recipe for retirement Q: My husband is going to be 65 in Nov. He would like to retire in March, but with losing a lot of his 401K, he wonders how he can recoup some of his loses, so it will be possible to retire, as planned. -Rose Mary, Wisconsin

A. Don’t make a sudden change to your investments. You don’t want to be too conservative or too aggressive. Look at how your investments performed during the last bear market in 2000 to 2002. If your investments held up and you were able to sleep at night, you may already have the right mix of stock and bond funds to weather another financial storm.

Still, consider adding a hybrid fund to your portfolio, suggests Vern Hayden, president of Hayden Financial Group in Westport, CT. “Hybrid” or “balanced” funds are funds that invest in a mix of stocks and bonds (usually 60% stocks, 40% bonds), giving diversification in a single fund. In addition to making the right investments, make sure investing enough. Contribute as much as you can to all tax-deferred accounts. Those 50 or older, you can contribute up $20,500 this year in a 401(k) and $5,000 a year in a traditional or Roth IRA. A Roth IRA is probably the better option if you have enough time before you have to start making withdrawals, says Patti Brennan, of Key Financial Inc. in West Chester, Pa.

Managing money in retirement Q: I would like information about managing finances once you're actually in retirement. Everything is about saving for the future. Been there, done that. How do I spend it now that I've got it? -Sondra, Blackwell, OK

A: You make a great point. You’ve worked hard, saved, and now you want to make sure that money will last. You may need to live on your retirement savings for 20 years or more. You don’t want to be too conservative or too aggressive.

First, you need to figure out how much cash you’ll need to live on. Fidelity (www.fidelity.com) and T. Rowe Price (www.troweprice.com) have good tools on their websites to help you figure that out. It would also be a good idea to talk to a financial planner, specifically for a cash flow analysis. You don’t necessarily need to buy more stocks or bonds or change your investment mix. But resist the temptation to load up on bonds or fixed income investments, says financial advisor Charles Massimo. By playing it too safe, “you may trade one risk for another and risk running out of money.” 

Get a financial plan
Q: I'm a 64 (65 on 3/15/08), on disability. My husband decided to divorce me one year ago so we sold our house. I have approximately $40,000 now. I'm disabled due to an on the job accident. My claim ($78,000+) should be finalized sometime early 2008. I have no credit card debt, or car payments. What should I do about housing: rent or purchase? Should I put any money into CD's, etc.? Thank you so much for your help as this is a very scary situation for me. -Mary  A: Congratulations on being debt-free! (You didn’t mention your medical bills. I hope you do not have medical debt due to your job-related accident).  I want to help you, but I really need more information. I would strongly suggest that you find a financial planner to help you figure out how you can reach your goals and live comfortably in retirement. Consider hiring someone who specializes in working with divorced women or the disabled. The Financial Planning Association’s website (www.fpanet.org) lets you customize your planner search by specialty. The National Association of Personal Financial Advisor’s website (www.napfa.org) can also refer you to an advisor in your area. Be sure to ask for references and interview several planners before choosing one.

CNBC Correspondent Sharon Epperson is the author of “The Big Payoff: 8 Steps Couples Can Take To Make The Most Of Their Money And Live Richly Ever After.”