Why Change Strategy Near Retirement?
Because:
- You do not have much time left
- You cannot afford to lose -- no time to recover
- You need stable income
Asset Allocation Principles Before Retirement
| Age | Stocks | Bonds | Cash |
|---|---|---|---|
| 50 | 50% | 40% | 10% |
| 55 | 40% | 45% | 15% |
| 60 | 30% | 50% | 20% |
Pre-Retirement Investment Recommendations
- Increase bond allocation -- stable income
- Maintain moderate stock exposure -- hedge against inflation
- Keep cash reserves -- liquidity
Summary
Near-retirement allocation principles:
- Reduce stock allocation
- Increase bonds
- Review regularly