Cliff Robb, Kansas State University in Manhattan

The pursuit of financial security can take a lifetime. With any luck, you began saving and investing with your first paycheck and expect to tap a fat nest egg throughout retirement.

However, it does not always — or even often — work out that way. For millions of people, saving is easier said than done. If you are middle aged or retired, you may have questions about how to secure your looming financial future.

Cliff Robb, associate professor at the Institute of Personal Financial Planning at Kansas State University, sympathizes with your plight.

He says the way you invest must change beginning in middle age and should continue to evolve through your golden years.

In the following interview, Robb offers some tips for investing in the second half of life.

What’s the ideal portfolio strategy for a middle-aged investor?

The easy answer is that it depends. That is not very satisfying, so we can speak to this in general terms.

Typically, if we consider the investment life cycle, portfolio allocation is often dependent upon time horizon. When you are very young, you presumably have a long time until you retire, meaning that investment portfolios can have a significant amount of risk.

As we grow closer to retirement — reaching middle age, for example — it is often wise to consider reallocation of portfolio assets for risk reduction. This may entail moving some assets from equities to bonds, or at least shifting into less risky equity securities. This strategy should continue as (the) time horizon shrinks.

Some researchers and experts have suggested equity holdings around 70 percent to 80 percent among young investors (with the other 20 percent to 30 percent divided among bonds and real estate), with equity holdings declining to roughly 60 percent in middle age (30 percent bonds, 10 percent real estate).

However, this is a very general outline, as there are often a number of personal and financial factors that need to be taken into account, not to mention external influences such as interest rates, inflation and tax policy.

The crucial rule is to be sure that assets are adequately diversified, with invested dollars spread among a variety of assets that are subject to different risks.

How about the investor who is approaching retirement?

As the time horizon grows increasingly small and retirement is right around the corner, individuals typically need to shift their focus away from accumulation of assets to preservation of principal. This is a process that should occur gradually, beginning back in middle age or just before.

Certainly, there will be those who realize that they have not saved adequately, and there are certain provisions in place that allow for increased retirement savings among those nearing retirement. It is common for those individuals to take advantage of those provisions to boost savings at this time.

Ideally, individuals have been active savers since beginning work. This includes part-time work as a high school or college student.

Individuals will want to put more of their assets into less risky classifications, such as bonds or cash-like assets. Here, one might reduce equity holding to 40 percent (with the other 60 percent being bonds, real estate and cash-like assets).

What about the investor who is in retirement? Is there a rule of thumb that should be followed?

One of the most difficult aspects of retirement is consumption of savings. Up until this point, individuals have been focused on putting money aside and planning for the time when they no longer have a steady income from employment.

As in the pre-retirement phase, preservation (within reason) of assets is critical. At this time, most individuals will want to be heavily in safer asset classifications so that more volatile securities do not impact their retirement income.

Individuals might keep roughly 30 percent of their assets in equity securities, with the other 70 percent in lower risk categories such as bonds, real estate and cash-like assets.

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