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Investing/Strategies / Retirement Investing
|Subject: Re: stocks for the retired||Date: 11/6/1997 9:29 PM|
|Author: JeanDavid||Number: 556 of 77208|
<People live around 20 years in retirement, but it seems all the attention is given to the young with lots of years ahead, I belive people living 20 years after retirement qualify for long term investment, but we get very little information for our 'situation'
I think one reason for the lack of emphasis, even in this folder, for the older investor is that most of the participants are younger. I am 59 1/2 or so, so am aware of the disquiet that this may cause you.
I think there are a couple of things to consider. First is that you do not wish to depend on dieing only 20 years after you retire, so you better have a longer-range plan than that in mind. You can arrange to never run out of money by having enough invested so you never touch the principle (preferably let it grow a little faster than long-term inflation after taxes). I know that for me, I doubt I would have the luxury of waiting 25-30 years for the market to recover after an unpleasantness such as happened in 1929 - 1931. An 80% drop! That would be as if the DJIA dropped 6400 points or so instead of the silly little 550 or whatever it was that shook up all the talking heads and astrologers.
The other thing is that all investors, not just the older ones, should have some money around to live on for the duration of any likely market unpleasantness. There is a little social security (that I do not think will fail, but it will not become adequate as a sole source of income either), and you should have 6 months or so (perhaps up to 5 years or so as we get older) in something more liquid than a volatile stock portfolio). You have to spend money every month even if the market is down. When it is down, use the more liquid investment. Just do not put too much into it. I would hate to have 5 years supply of money in a money market or even treasury bonds. At present, I have about 2 years in mostly 6% savings bonds (2 years of squeaking by, less than one year's salary when I was working), and some money in Swiss Francs (about the same amount). But I think a case could be made for keeping it all in stocks.
Recently Robert Sheard suggested subtracting your age from 100 and putting that amount into a growth portfolio and the rest into a value portfolio. Thus, as you get older, your investments would become more conservative, but not something a lousy as bonds which, after taxes, just barely keep up with inflation.
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