It’s the foundation behind most financial advice proffered today. It’s the methodology taught in most finance courses. It’s the doctrine that powers most “robo advisors.” Unfortunately, it also may be totally wrong.
A “balanced” portfolio made up of 60% stocks and 40% bonds has long been championed as the safest, most conservative investment allocation for retirement planning. Recent research shows that this “sleep at night” approach may be far riskier than we’ve been told. You owe it to yourself to check this out: https://www.marketwatch.com/story/your-portfolio-may-be-riskier-than-you-think-2018-10-11
When the markets get jumpy people start to wonder whether their retirement savings are going to go the distance. Now might be a good time to review the basics, aka “The 10 Commandments of Retirement.”
My favorite is Commandment #10: “Invest in ways that will provide a steady income stream in retirement. In many ways, retirement is no different from your working years: You want a steady flow of income. Do not be totally exposed to stock market fluctuations. You don’t want to worry about where [your withdrawals] will come from each year.”
One decree some might take exception to is using municipal bonds to reduce retirement taxes. It may be just a question of timing, but one has to consider whether bond funds make sense in a rising interest rate environment. There’s also the default risk some municipalities may pose.
Social Security beneficiaries will receive 2.8% higher benefits in 2019. This is the biggest COLA increase since benefits went up 3.6% in 2012.