In Your 60′s and Saving Your Retirement

I’m turning 60 this month so the headline of a recent MarketWatch piece caught my eye. “Four Ways 60-Year-Olds Can Save Their Retirement”  We know that lots of boomers are inadequately prepared to retire (as in financially way behind). The problem is that there are no quick fixes.

The article contains the standard recommendations:  save more, use proper asset allocation, work longer, and delay taking Social Security. Sadly, many boomers are unwilling or unable to adopt the “work longer” and “delay Social Security” strategies.

My issue is with the asset allocation commentary in the article. Several “experts” are quoted about how a sixty-year old should allocate his or her retirement nest egg to “save” their retirement. The recommendations for equity allocations are all over the map.

When that happens, my reaction is that some if not all of these “experts” don’t know what they are talking about. By that I mean that they are still operating under old and worn out investing “rules of dumb” or they are just parroting what they have heard repeated endlessly by others.

Also, telling a behind-the-money-curve boomer to adjust equity allocations to a “sensible level” (as one “expert” did) is meaningless.

To me, the most insightful comment on the asset allocation question was this one:

Optimum asset allocation for U.S. investors using the entire market history, including the black swan events, as well as the future withdrawals, is about 35% equity and the rest in various short- to mid-term fixed-income instruments and other asset classes.

I liked this comment because it specifically addressed “black swan events” in which all asset classes tend to fall together. That’s what happened in 2008.

Not one of the quoted pundits bothered to distinguish investing to fund basic retirement needs from investing to fund discretionary spending. This failure to separate risk-taking in these two retirement income areas continues to amaze me.

Here is a link to the full article: Four ways 60-year-olds can save their retirement

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