The retirement danger zone

Saving for retirement and managing your retirement savings are two very different things.

Advisors counsel younger workers to take advantage of their company’s 401(k) programs, sock away 6 months of earnings for emergencies and avoid excessive debt.

That may seem straightforward, but it’s hard for many families to pull off.

In a recent survey by Bankrate, by far the biggest financial regret was not saving enough for retirement.




Red Zone

Yet that’s just the basics. As you approach retirement age, in my opinion, savers need to be vigilant and strategic.

It’s important to move from less risky assets to a more conservative portfolio as you get older in my opinion.

If you are just-retired and get hit by a stock market crash early in retirement, the implications can be dire.

Wiped Out

That’s the takeaway from a Prudential study that analyzed what happens withnegative investment returns during that crucial first five years of retirement.

A hypothetical $1 million portfolio that endured steep losses in four of the first five years actually might run out of money in 15 years, according to a summary of the Prudential study by

Most advisers say retirees should have resources to cover 30 years.

DIY Pensions

One way to protect yourself is to build your own pension, according to Ted Jenkin, co-CEO and founder of oXYGen Financial, writing in the Wall Street Journal.

Of course, corporate pensions are rare in this era of 401 (k)s and defined contribution plans.

However, as Jenkin’s notes:

“The retirees that feel the most secure are the ones that retire with a pension. They think less about the stock and bond markets because they get a guaranteed paycheck every month…You can do this through various methods, such as guaranteed annuities, cash value life insurance or even rental real estate.”


Building a financially secure retirement plan takes time and strategic thinking.

Adequate savings are just the beginning.

You also need to be smart about portfolio composition and achieving a steady income stream during your golden years.
Photo Credit: Alexander Svensson via Flickr Creative Commons