A snapshot of the U.S. retirement market tells the story. Of
the $23 trillion in retirement assets, more than half is in
401(k)s and IRAs, and the rest is in defined benefit plans,
annuities, state and local pension plans and an array of
other financial vehicles, according to the Investment
Company Institute's most recent 2014 Fact Book .
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retirement
Just beginning to think about what you need to do may be
the hardest step. If you're in your 50s, you might be stuck
in what McCarthy calls the "dead leaf" syndrome. You're
looking ahead to a time when you're no longer needed-to
avoid feeling like a dead leaf about to be swept to the curb-
you might be tempted to ignore your retirement portfolio
altogether. That would be a mistake.
Ignoring your portfolio could come at a high cost if history
catches you at the wrong moment. At the end of 2007,
investors were woefully weighted with stocks, according to
the Employee Benefit Research Institute. Nearly 1 in 4
Americans ages 56 to 65 had more than 90 percent of their
account balances in equities at year-end 2007, and over 2
in 5 had more than 70 percent. Equities declined nearly 40
percent the ***owing year, wiping out billions in retirement
savings for many retirees. It forced many near-retirees to
delay stepping out of the workforce.
The typical retirement-age couple walks in the door with
portfolios overweighted in equities, said Tim Maurer,
director of personal finance for the St. Louis BAM Alliance,
which represents 142 independent investment advisors
nationwide. "Typically, we are dialing it back," he said.
Now, as the economy hums along and the market rises, it is
a good time to bulletproof your portfolio against the
volatility that can strike at any time.
Building a solid nest egg: It's location, location, location
1. Figure out what you need. Any financial advisor worth
his or her salt will tell you that as you enter your 50s, you
need to have a firm idea of the budget you'll need in
retirement, so before you begin bulletproofing, have a clear
sense of your required monthly income. The typical
household made up of Americans in the 55-to-64 age
range has accumulated only enough retirement assets-
$120,000-to produce $400 to $500 of income a month to
add to Social Security payments, according to the Federal
Reserve's Survey of Consumer Finances.
That typical retirement savings of $120,000 will produce
about $400 to $500 a month in income. The typical Social
Security benefit is $1,887.
2. Save more, and extend your working life. The biggest
lever you can use to bulletproof you retirement portfolio is
to put more money into it, which you can do by saving
more. And the simplest way to do that is to work longer.
Suppose you need $80,000 a year in retirement. If you can
continue to earn $100,000 a year for five years past your
expected retirement date and put aside $20,000 or $30,000
of that a year, you will have added a total of six to seven
years of income to your portfolio. You can also increase
your Social Security benefit 76 percent a month by delaying
your claim from 62-the earliest year you're allowed to
claim-to 70.
Read More Savvy ways to build a retirement investment
plan
3. Diversify. If you want to lower the volatility of your
portfolio, diversify within and among asset classes. That
means owning funds instead of individual stocks, and
owning multiple asset classes instead of just one: a
portfolio of emerging markets stock and bond funds, plus
domestic stock and bond funds. As always, keep your fees
low.
Vanguard projects returns for a balanced portfolio of 60
percent stocks and 40 percent bonds over the next 10 years
to range from -3 percent to 12 percent, with the most likely
scenario between 1.5 percent and 7.5 percent a year on an
annualized basis. Equities alone are forecast to have a
return centered on the 6 percent to 9 percent range, but with
a possible swing from year to year of a full 18 percent.
Bonds expected returns are centered in the 1.5 percent to 3
percent range. The translation: You'll probably earn nearly
as high returns with a balanced portfolio, but you'll face
much less volatility.
You can either diversify your own portfolio or buy a good
low-cost target date fund. Vanguard offers some; Fidelity
Investments offers theFidelity Freedom Index Funds
(NASDAQ:FLIFX-O) , which are similar. Just remember: in
order for a target date fund to work properly, your whole
retirement account balance needs to be in the fund.
4. Design your asset allocation with an eye to taxes. If you
have significant holdings outside your retirement accounts,
think through which asset classes belong in your retirement
account. You'll save significantly on taxes if you keep the
equities-which you may buy and sell more frequently as
you rebalance-in your retirement portfolio. But don't make
your portfolio decisions around your tax savings;
maximizing your investment returns and keeping your
principal safe is a higher priority, McCarthy said.
5. Keep a healthy portion of equities. Don't make the
mistake of getting rid of all of your equities and shifting into
money market funds because you think they are safer. "You
could move too conservatively," said Maria Bruno, senior
investment analyst at Vanguard. If you look at the returns
of equities and cash every year since 1926, she said,
equities lost value in a third, but on a real basis, cash lost
money in a third of the years, too, because of inflation. Most
experts recommend that in retirement you have at least a
20 percent allocation to equities. If you have nerves of
steel, you can keep much more than that in equities.
6. Relax and set yourself up for automatic rebalancing.
You'll be retired for a long time, so in order for your money
to keep working at the highest possible pace, you need to
continue selling high and buying low, which is what
rebalancing automatically does for you. A target date fund
will rebalance automatically; so will a number of online
options and investment advisors. Ask at yours.
el punto 2 lo dijo en el debate de la sexta el otro día un economista. no abrir pensiones privadas, invertir ese dinero en mantenerse activo.
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