||Ask Dr. Don
Investing as you near retirement
Dear Dr. Don:
My question is about investing for the long term. What are the benefits
now that I am 60 years old? Can I still invest for the long term
since my retirement is only five years away?
May you never be in the "don't buy any green bananas"
camp of investing, or living for that matter. As you near retirement,
however, you run out of rebuilding years in your retirement portfolio.
That means that you need to be more concerned about the safety of
principal in your investments. That said, you still have to be concerned
about protecting the purchasing power of your retirement portfolio.
The Living to 100
Life Expectancy calculator presents the average life expectancy
for women as 87 years. The IRS
tables estimate that you'll make it to 85.2. (The IRS focus
is on your money, not your health.) If we assume you make it to
86, that means you'll be in retirement for 21 years.
So you need a long-term approach to your investments
even at 60 because you'll be counting on the portfolio preserving
your purchasing power and protecting your wealth for a long time
If you haven't done so already, walk through a
retirement calculator to see how things are shaping up for your
retirement and an
asset allocation model that analyzes how you're invested and
recommends possible changes to your portfolio. Before making any
radical changes consult with a
fee-only financial adviser.
-- Posted: Jan. 2, 2003