How you fund and maintain the assets in your retirement portfolio is the most important decision most investors in the stock market make.
If you are too conservative with your stock investing strategy, you may not have enough to retire when and in the manner you want. If you take too many risks investing in the stock market, you may see your retirement funds disappear in a gut-wrenching market slide at just the time you planned to retire.
The goal for retirement investing is to hit the right balance between too conservative and too risky.
There is no single solution to this problem - you'll have to figure out what works best for you considering your circumstances, tolerance for risk and time remaining (if any) until retirement.
The following articles will help you find the correct spot for your retirement investing. These articles offer some thoughts on possible strategies and considerations.
While the stock market has performed well over the long term (even when you include the 2008-09 meltdown), it can be brutal in the short term.
It is this timing issue that poses the greatest threat to retirement incomes. The conventional wisdom is that you should reduce your exposure in stocks as you approach and enter your retirement.
This is still good advice, however it is not that simple - few things are these days.
Tough economic times may force your employer to reduce or eliminate its match in your 401(k) plan. What should investors do if this happens to them?
Many 401(k), 403(b) or other employer-sponsored retirement plans match employees' contributions up to a specified limit.
If you are like most participants in 401(k) retirement plans, you may be making plans to work another five years or more beyond when you want to retire.
A stock market collapse or significant downturn can crush these popular retirement plans down to half their former sized in some cases.
Is there a way you can resuscitate your 401(k) in a reasonable amount of time (hopefully before you want to retire)?
In addition to the usual risks facing investors - inflation, market risk, economic risk, and so on - there is a new risk to confront.
Actually, it's not new, but investors and financial advisors have given it a name: the longevity risk.
The longevity risk is the good news/bad news that modern health care has extended the average life span, which is the good news part. The bad news part is that many of us may outlive our retirement plan.
What role should stocks play in your investment plan for the last years leading to retirement?
The conventional thinking has been to roughly take your age and subtract it from 100. The result is the percentage of stocks in your retirement portfolio.
The rest of your retirement portfolio is primarily bonds and cash. Some would argue for a small portion of real estate and precious metals.
Do you know the rule about the percentage of stocks you should own when you are at or near retirement? Many financial advisors suggest that a balance of stocks and bonds (I would include cash) is what your portfolio needs.
To find that balance, the rule was take your age and subtract it from 100. The remainder should be the percentage of stocks in your portfolio.
Articles on Investing for Retirement in this Series
Tough Choices for Stock Investors Facing Retirement
What to Do If You Lose Your 401(k) Match
Can Your 401(k) Be Resurrected?
Investing to Avoid the Longevity Risk
Time to Re-Think Role of Stocks in Retirement
Don't be too Conservative with Stocks in Retirement