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The Importance of Diversification in Retirement Portfolios

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:

 

A Financial Planner’s Guidance for Women on Planning for Retirement

A Financial Planner’s Guidance for Women on Planning for RetirementIt is a fact that 90% of women will be single at some point during their retirement. According to the 2014–2015 Prudential Research study “Financial Experience & Behaviors Among Women,” nearly half of those age 75 and older are single because of widowhood, divorce or never having been married. This means women need to be proactive when it comes to planning their retirement and this article offers suggestions for starting the conversation.


Using Cash and Short-Term Bonds to Avoid Taking Losses in Retirement

Jane Bryant Quinn

Jane Bryant Quinn is a nationally known personal finance writer and commentator. Her latest book is “How to Make Your Money Last: The Indispensable Retirement Guide” (Simon & Schuster, 2016). In this conversation with AAII Journal editor Charles Rotblut, the two discuss why retirees should have the equivalent of up to five years of expenses allocated to cash and short-term bond funds.

 

The Importance of Diversification in Retirement PortfoliosThe Importance of Diversification in Retirement Portfolios

Diversifying a portfolio among four primary asset classes allows for large withdrawals to be taken throughout retirement. This article analyzes various portfolios and how long they survived over 55 rolling 35-year periods from 1926 through 2014. Additionally, the assortment of retirement portfolios was tested under several different withdrawal rates.

 

A Simple Formula for Calculating “Safe” Retirement Spending

In the aftermath of the financial crisis of 2007 to 2009 and in the face of record-low interest rates, some are calling into question the “4% Rule” for retirement withdrawals. In 2016, the Society of Actuaries’ (SOA) Committee on Post-Retirement Needs and Risks awarded first prize to Evan Inglis, a senior vice president for Nuveen Asset Management, in a call for essays for his discussion about a simple strategy to determine how much can be safely spent in retirement. This article outlines Inglis’ “feel free” spending formula.


Our Member Question for this week is:

Thirty years ago, the biggest one-day stock market drop in Wall Street history took place. Do you think a “Black Monday” crash could occur again?

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Vote to answer this week’s Special Question: If you were revamping the U.S. tax code, what major changes would you make?

Last Week’s Results:

Thirty years ago, the biggest one-day stock market drop in Wall Street history took place. Do you think a “Black Monday” crash could occur again?

Poll results are as of 9 a.m. (Central) on Monday. 2,677 respondents.


AAII Survey: 30 Years Later, Most Individual Investors Believe Another “Black Monday” is Possible

On the 30th anniversary of Black Monday, the single-worst day in U.S. stock market history, we asked our readers whether they feel another Black Monday event is possible. We also asked what lessons they learned in the aftermath of such a swift and severe market downturn.

Profitable Retirement Planning

This e-book, which is available exclusively to AAII members, was written to help our members achieve a financially secure retirement. The book offers an overview of many of the primary considerations for retirement planning, including: how much you need to save; where your retirement income will come from; what asset classes you should invest in; and what you should take advantage of in your company’s defined contribution plan (if available).

 

 

 

The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a 30-day Trial AAII Membership to start becoming an effective manager of your own assets.

 

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