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Adjusting Investment Strategies As Retirement Approaches

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Many baby boomers are beginning to approach retirement age, but the recent economic downturn has taken a toll on their retirement portfolios. Just about everyone suffered some financial losses during the recession, but this isn't a reason to give up hope. Nevertheless, sticking with the same plan will likely not yield the savings soon-to-be retirees are hoping for. Recovering from a loss will require adaptation when it comes to investment strategies, according to U.S. News and World Report.

It's no secret that many seniors' retirement savings are in rough shape. According to the news source, the average 401(k) balance at the end of 2007 was $64,454. Just one year later, that number had plummeted to $50,274, a 22 percent drop. While retirement savings have slowly recovered since the recession, they're not all the way there yet, and many seniors are approaching retirement age without the savings they hoped to have.

What type of strategy a future retiree adopts will largely depend on their age. The stock market is cyclical, and those who are in their 30s and 40s can likely wait out the bad period and plan long-term. Yet those who are in their 50s or even 60s have a few short years before they'll actually need to begin using the money in their retirement portfolio. In these situations, it might make sense to sit down with a retirement planner and hammer out a new strategy, so seniors can be sure they'll be able to pay for a retirement community when they grow older.

Every person's financial situation is different, which is why its beneficial to get specific advice. In general, however, those who are older should be putting most of their portfolio into bonds. Bonds are a low-risk, low-reward investment strategy, and can be a good play for someone who wants to increase their savings over time while protecting what they currently have.

On the other hand, some seniors may want to be a bit more aggressive. CNBC recently reported retirement strategies in general are focusing more on stocks in order to make up for poor performance. Of course, seniors need to be cautious. Even though it is the fastest way to see dramatic returns, if the money fails, seniors don’t have the time to recover that a 30-year-old might have.

Seniors should keep in mind that many elder care facilities have financial options available that can lower the cost of living for older residents. Even those who have significant retirement savings should look into these options to ensure they get the most for their money.

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