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In the old days, three or four years ago, most people had two major job concerns — getting laid off or not getting raises and promotions fast enough.

Now many face a new concern — a prolonged pay cut. The New York Timesreports that employers are resorting to pay cuts more frequently than at any time since the Great Depression. The Times story describes an airline pilot demoted for budgetary reasons from captain to first officer, slashing his pay in half. Other employers eliminate overtime, shorten work weeks or trim benefits.

For years, American workers have seen income stagnate or decline when inflation was taken into account. But the idea of a dramatic reduction in pay for doing the same job is new for many, and it makes a mess of long-term financial plans.

Tools like BankingMyWay’s Retirement Planner ask users to estimate future income increases, not reductions, and many assume that annual savings will grow as income goes up. Erase these assumptions and the calculations give dramatically different results.

Using the retirement planner, consider a 30-year-old with no current savings but the ability to put aside 8% of a $50,000 annual income. This person could build up a nest egg of about $990,000 by age 65.

But that assumes income would increase at 4% a year, allowing annual savings to increase as well. Cut that figure to zero and the nest egg will grow to less than $635,000. Do that and also cut the current salary to $45,000, and the nest egg would be just $571,000.

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In real life, the situation might be even worse, because the pay cut could force the worker to save a smaller percentage of salary. Cut the savings rate from 8% to 5% and the nest egg ends up at only $357,000.

Other than finding a better-paying job, what can you do to offset the damage from any future pay cut? The first step is to start building a rainy-day fund now, so you will be able to make ends meet until you can get a raise or find a more generous employer.

And it makes more sense than ever to set up a lifestyle that costs substantially less than you make. That will allow you to save more now, and to forestall a crisis if your income drops. Postpone a car purchase, and don’t buy the most expensive house you can afford. Trim incidentals like entertainment and meals out.

Of course, it also makes sense to have a Plan B, such as postponing retirement a few years.

A rainy-day fund should be accessible, which makes bank savings or money markets the first choice. But since you won’t need all the money at once, you can reach for a little extra yield by tying some of it up. The Survey shows that two-year certificates of deposit pay about 1.5%, more than twice as much as the 0.7% you’d get from the average six-month CD.

Use the CD Ladder Calculator to figure the best mix of short- and long-term CDs. And use the search tool to find better-than-average deals. Discover Bank (Stock Quote: DFS), for example, has a 12-month CD paying just more than 2%, while IngDirect (Stock Quote: ING) has one paying 2.25%.

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