After you retire, with the possibility of decades ahead of you, where should you park your nest egg? Experts are divided on how conservatively, or aggressively, you should invest your money.
"Great funds to own in retirement," according to this post at Kiplinger.com, should continue to represent a mix of stocks and bonds. "Keep your focus on growth," writes Stacy Rapacon. She cites an expert, Tim Courtney of Exencial Wealth Advisors in Oklahoma, who recommends "putting 15 percent to 30 percent of your retirement portfolio in high-quality bonds and 5 percent to 15 percent in riskier bonds. The remainder should go into 'growth investments' - primarily U.S. stocks." She goes on to name specific mutual funds and exchange-traded funds that could fit those requirements.
Other options for investing postretirement are outlined by Meghan E. Smith at Howstuffworks.com. "Retirement is not the time to put most of your money into high-risk investments," she writes. "You want to ensure that you have a secure financial base to last the remainder of your life, which could realistically be several decades. Whatever money you put into a high-risk investment could be lost, so you need to balance things out with low-risk financial opportunities." After being sure to set aside an emergency fund, low-risk U.S. Treasury bonds and annuities are at the top of her list. Annuities are a way of setting aside money in a manner that is meant to guarantee regular payouts to you, like receiving a salary.
The nuts and bolts of handling money after retirement gets attention from this post at WellsFargo.com. It suggests a short list of rules to keep you on track. Among them: Consolidate accounts. People with one or more 401(k) retirement accounts from former employers can roll them over into a single IRA to simplify matters. Another rule: "Factor inflation into your planning." Relying "wholly on CDs, money-market accounts, and other seemingly low-risk choices to park your cash could be hazardous to your wealth," it says.
Citing recent research, this blog post at the Christian Science Monitor lays out a counterintuitive plan - gradually increase investment risk after you've got the gold watch. This plan starts with advice to "decrease your stock exposure the first year in retirement and don't worry about missed opportunities." After that, however, "retiree portfolios that begin with a 20-40 percent allocation to stocks and increase to 60-80 percent generally increase the success of retirement income."
Read the full study, one of whose authors, Wade D. Pfau, is a professor of retirement income at American College in Bryn Mawr, at this page of the Journal of Financial Planning.