My 86-year-old widowed mother-in-law keeps her money in places where inflation is the only risk -- savings bonds and savings accounts at local banks. She and her friends complain daily about today's rates and together watch for opportunities to get another point or two of interest. But none of them would ever consider putting their savings where even a penny might be at risk -- even if the potential for growth was great.
Her investment habits are apparently pretty common among people living in retirement. MetLife released a study yesterday that showed that 52 percent of people with more than $200,000 in investable assets are parking their money in bank savings accounts; 51 percent are using money market accounts; and 38 percent are using certificates of deposit. Some 21 percent have money in savings bonds.
Far be it from me to be critical of my mother-in-law's retirement planning approach. Her fiscal conservatism has served her well over the years. Nevertheless, I think it is worth pointing out another study commissioned by U.S. Bank that shows that 92 percent of people with investable assets of $1 million or more haven't abandoned the stock market.
While 45 percent say they are less tolerant of risk than they were three years ago, 47 percent say their investment risk tolerance hasn't changed. About 60 percent say they seek a rate of return that outpaces inflation, taxes and fees, and 29 percent are looking for growth beyond those factors.
When you're 86, holding tightly to your nest egg is probably the right thing to do. But those of us with miles to go should probably take our cues from the less risk averse. Otherwise, by the time we're 86, we may not have anything left to invest.