Nest egg management 101

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Joe, our favorite server at our golf club’s 19th hole, is no spring chicken. If I had to guess, I’d say he is well past age 70. I asked him once when he was planning to retire, and he told me, “Never. … I had too much invested in one stock, and the company went bankrupt.”


In some ways, I’d say he’s lucky. He’s healthy and seems to like his work. Many of his customers undoubtedly tip him well for his pleasant and attentive service. There are worse ways to spend your days. But his life isn’t what most of us think about when we consider retirement.

A common fear

A survey by PNC Financial Services Group suggests that Joe’s situation is probably not all that uncommon. The survey showed that many retirees don’t manage their nest eggs wisely. For instance, 52 percent of retirees have withdrawn money from their retirement savings without having any withdrawal plan in place. Of those, 59 percent said they withdrew the money because they needed it to pay expenses.

Joe Jennings, investment director at PNC Wealth Management in Baltimore, says that when a retiree takes money from his savings, “He ought to have a strategy. He needs a good plan in place that will help him navigate through today’s volatile investment waters, so he doesn’t make a course correction at the wrong time.”

Some 53 percent of the people surveyed by PNC say they fear running out of money in retirement. Of those who have this concern, 35 percent say they are dependent on their investments for income — as opposed to primarily relying on money from an old-fashioned defined benefit pension, Social Security or some other regular source of income. As pensions grow less common among retirees, the consternation over coming up short is likely to be even more widespread.

Plan your retirement income

In its recent white paper on investment and portfolio strategy, PNC discussed four basics of retirement planning nest-egg management. None of this is news, but all of us who depend on our nest eggs to help pay the bills can use a reminder.

  • Allocate assets strategically and maintain that allocation systematically.
  • Create an income floor: Invest so your portfolio yields enough regular income to cover your needs while managing the balance for longevity and growth.
  • Maintain a cash cushion to protect you from having to sell at the wrong time.
  • Stay invested. Don’t sell in a panic when the market takes its inevitable dips.

Below are some suggestions for asset allocation from PNC.

PNC asset allocation profiles

Stocks Bonds Cash Total
Type: Preservation Stocks: 15% Bonds: 30% Cash: 55% Total: 100%
Type: Conservative Stocks: 35% Bonds: 65% Cash: 0% Total: 100%
Type: Moderate Stocks: 50% Bonds: 50% Cash: 0% Total: 100%
Type: Balanced Stocks: 65% Bonds: 35% Cash: 0% Total: 100%
Type: Growth Stocks: 80% Bonds: 20% Cash: 0% Total: 100%
Type: Aggressive Stocks: 100% Bonds: 0% Cash: 0% Total: 100%

Source: PNC

Read about 7 retirement planning myths to dispel.