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Basic thinking of 401k strategies is that the closer you are to retirement, the less aggresive your investments should be, right?

well, i just talked to a financial advisor. his take was that you can stay at a 10% rate of return (80% stocks/20% bonds) throughout your life.


When you're working and will work for a few more years, I think you need to go for return. When you're approaching retirement, you need to think more about capital preservation. Even then, you have to shoot for a return that will keep you from running out of money at your X% withdrawal rate.

The 80/20 mix we always talk about isn't all THAT aggressive. The 80% is S&P500 or Wilshire 5000, not a bunch of telecom, biotech and internet stocks. Sure, it's got more "risk" (fluctuation of returns) than a 50/50 mix, but if you have a 30 year time horion, the 50/50 mix has a higher chance of you running out of money at the usual withdrawal rate (which, around here, we use 4%).

Past performance is no guarantee of future results, but we don't have anything else to go on. That's why it's comforting to have additional possible sources of income besides your retirement stash--
-Pension
-Social Security (if you weren't counting on it, any amount is gravy)
-Paid off house in case you need to do a reverse mortgage
-Supplemental work, which you could do to get out of the house or be out with people or whatever, but the money would be a nice side benefit
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