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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?
Ingrid Interest

Dear Ingrid,
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.

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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 to come.

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

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Retirement plan distributions
How to get financially fit before retirement
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