Here’s a news flash: you’re not 30 anymore!
And thank God for that. But does your portfolio look like it belongs to a 30 year old?
When you’re 30, and you have a big loss in your portfolio, you have 20 t0 30 years to make it back again. When you’re in your late 50’s to early 60’s, you don’t have 20 years to make back your losses. If you have a 2008 or 2001 size loss, your retirement plans are going to go through a major change. You will either have to work a lot longer to try to get back to where you were or you will simply have to live a smaller, more stressful life for the next 20 to 30 years. It’s as simple as that.
Folks, this is not rocket science! But every week we evaluate the risk level of many, many portfolios and the great majority of them have a lot more risk than I am comfortable with for the stage of life our potential clients are at. They’ve been told that their portfolios are “well diversified”. But when we use high level analytical software to evaluate their portfolios we find that most people face potential losses of 30, 40 or 50% during the “next” 2008. They basically own a lot of different stocks and mutual funds that all move in the same direction during up-turns and down-turns.
When you’re 30, it’s all about Growth, Growth and Growth. When you’re in your late 50’s to early 60’s it should be about Protection, and then Growth, Growth, Growth. It’s a change in perspective; you simply cannot tolerate a major loss at this stage of your life!
Another difference from a 30 year old’s portfolio is that a portion of your portfolio needs to be re-positioned to begin creating the income you are going to need in retirement. When you stop working and the paychecks stop being deposited into your checking account, the bills keep coming in. Here’s another news flash: Social Security will not cover your expenses and you’ll need to generate more income in your portfolio to protect your lifestyle.
You’re not a 30 year old anymore and your portfolio shouldn’t look like it belongs to one. Reduce and manage your risk and create income so that you can both protect your lifestyle and lead a stress free retirement!