Tips For The Retirement Investing For 40s And 50s Age Group People


Those baby boomers who are in their forties and fifties now see a complicated future that is rife with uncertainty where retirement plans are concerned. So many unknown specters are waiting in the wings for them, including the possibilities of skyrocketing inflation, zero to low global growth, and unclear direction of investment and asset prices in the near to medium term futures. Since both preserving and growing wealth for retirement in this challenging environment is harder than it has been in more than half a century, those who are investing for retirement in their forties and fifties need to consider some facts and tips.

In the last decade, Baby Boomers have suffered through two horrible stock market set backs and a plummeting real estate value that have upset many of their retirement plans. These were the dot com crash and more recently the financial collapse of 2008-2009. Free falling real estate prices have also severely drained practically all investors net worth amounts. Home equity is no longer there for people nearing retirement to fall back on. Bonds, long considered a dependable stalwart of investment portfolios have disappointed too. Extremely low interest rates are causing them not to pay enough to be meaningful contributors towards retirement. In light of all of these problems with traditional investments for retirement, these two age groups have different immediate concerns where their retirement plans and investments are concerned, based on their different ages.

Saving and Investing Concerns of People In Their Forties

Forty-somethings have their own unique issues. Chief at the front of their worries for retirement is not coming up with a sufficient amount of money to retire. They have to walk a fine line between the sometimes adversarial goals of creating and building up the retirement nest egg while dealing with the enormous costs of paying for their children’s college education. Corporate pensions have disappeared or been substantially reduced, and Social Security is obviously going to be in big trouble by the time they retire. The heavy burden on the shoulders of people in their forties is in coming up with sufficient retirement funds, which will need to be enormous.

Saving and Investing Concerns of People In Their Fifties

This aged group of investors preparing for retirement had become used to and comfortable with a now impressive eight and a half percent yearly return on their investments. This was true in the past, and it may be true once more over the longer term, but it is certainly not the reality these days. This age group is quickly approaching retirement age and looking around at a decade where cash on hand actually managed to outperform stocks. A great number of people in this group have watched in grief as their investment accounts and 401K’s shrank over the time period. Compounded returns worked well for them in the past over time, but this age group no longer has much time with which to work. They are facing questions like how long they will be forced to work, and at what age will they be able to retire.

Creating A Road Map

These two age groups need to begin by coming up with a road map that they revisit on a regular basis. It should consider investment returns each year, the rate of inflation, and any other considerations that could impact retirement payments. Annuities are one investment vehicle for dealing with these concerns. They should also evaluate both their insurance needs and health coverage. Long Term Care Insurance can be a sensible idea in making sure that retirement money is not eaten up should a person or spouse have to pay for assisted living facilities or in home assistance. It only takes one health care emergency to massively set back an entire retirement savings. Because of these things, this road map should be evaluated minimally on an annual basis.

Re-balancing The Portfolio

Investors in these age groups ought to consider their various investment strategies, along with their levels of acceptable risk. Successful retirement investing is found in walking the fine line between returns that are needed and a risk level that the person can tolerate. This could mean changing the allocation of a portfolio as one gets closer to retirement.

As people get nearer their desired retirement age, volatility and risk begin to frighten them more. Portfolios still have to be watched. Asset allocation should be considered on a regular basis. It is commonly suggested that exposure to stocks should be the number one hundred minus the person’s age. So a fifty year old would only have half of his or her retirement money in stocks or mutual funds. Another approach is to think about how soon money will have to be withdrawn. Monies that are required within the next ten years should not be put into too much short term volatility like the stock market. Monies needed in the next year should be put into guaranteed types of investments.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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