Are Seniors too Risky?

By: Max Valavanis, CFP®

When was the last time you rode a roller coaster? For most seniors, the answer would be years or even decades. The appeal for flying around on a guided bullet doesn’t linger long for many senior citizens. Why would it? Despite many theme parks boasting about their safety, taking such a risk doesn’t make sense. So why would you ride a roller coaster regarding your retirement? If the rapid rise and fall of The Hulk at Universal Studios makes you sick, wouldn’t the same be true for your investments?

           Year after year, we see the baby boomer generation investing heavily in equities, such as the S&P 500. This generation believes in resilience in the market and sticking with investments while they’re down since the market always rises over the long run. According to Vanguard, investors aged 55 and older have a median allocation of 63% in equities. While equities can cause the most turbulence in an investment portfolio, senior investors are used to it. Since the 1980s, baby boomers have experienced a multitude of market crashes, from Black Monday in 1987 to the 2001 pop of the dot-com bubble, to the 2008 great recession. Baby boomers have survived these calamitous events as the market eventually pulls through. So why be more conservative?

While admirable, this ideology can be a double-edged sword. In retirement, hitching your nest egg to the market could cause a considerable decline in quality of life. If the stock market does descend, like a roller coaster, it can take you for a ride. During the aforementioned events, most of you readers were employed. In these times, the stock market may crash, but you would still earn that paycheck week in and week out. The reliability of income was usually enough to offset the worries of the markets for most baby boomers. So, what happens when the comfort of the paycheck disappears and all you have left is Social Security and your vulnerable nest egg?

           Before retirement, you’re in the accumulation phase. The goal is to add enough money to the piggy bank so you have plenty for the rest of your life and – possibly – have some left over for your loved ones. On the other hand, retirement is about the management of the money in your piggy bank. Seniors should want to maintain and utilize their retirement funds in the best manner possible. This means investing your retirement in a customized portfolio that allows you to preserve your quality of life while protecting your money in case of an emergency or for your loved ones.

More often than not, investing aggressively in equities and the stock market isn’t the best way to achieve this success. A careful and targeted portfolio is often the ideal strategy for your goals in retirement. We at ValaVanis Financial specialize in crafting these customized retirement strategies. Too often, we encounter seniors bleeding financially due to overexposure to risky investments. If you are worried about the riskiness of the market or customizing your portfolio for your needs, call us. We offer a no-obligation appointment for the readers of the Senior Scene. We can help you get off that roller coaster!

Max Valavanis, CFP® is a co-owner of ValaVanis Financial in downtown Melbourne and in Rockledge. Max specializes in lifetime income planning for Retirees while protecting principal.  Max can be reached at 321-956-7072.