How to Invest for Retirement at Age 60 and Beyond

Because of increased longevity, increased medical expenses, and lower retirement savings, today's retirees are changing the rules of investing. When it comes to investing safely for retirement, traditional advice would be to subtract your current age from 100 to determine what percentage of your investment portfolio should be in stocks instead of other more conservative investments. So, at the age of 60, an investor should have 40 percent of their portfolio in stocks. Learn why this advice is shifting and why financial experts are changing recommended guidelines for older investors.

Because of increased longevity, increased medical expenses, and lower retirement savings, today’s retirees are changing the rules of investing. When it comes to investing safely for retirement, traditional advice would be to subtract your current age from 100 to determine what percentage of your investment portfolio should be in stocks instead of other more conservative investments. So, at the age of 60, an investor should have 40 percent of their portfolio in stocks. Learn why this advice is shifting and why financial experts are changing the recommended guidelines for older investors.

A New Guideline for Older Investors

Today’s retirees look different than previous generations of retirees. They live longer, but they generally have less money saved for retirement while also incurring higher medical expenses. Because of these changes in demographics, financial experts are encouraging older retirees to keep money in stocks for longer.

The new guideline recommends that instead of subtracting your age from 100 to determine your stock allocation, you should subtract your current age from 110 or 120. This would mean that at age 60, an investor’s portfolio should be comprised of 50 percent to 60 percent stocks, much higher than the previously recommended 40 percent.

Personal Portfolio Allocation Considerations

Ultimately, this leads to a more aggressive and less conservative approach to an investor’s portfolio. However, exactly how aggressively you should invest in retirement at age 60 and older depends on several important personal factors.

Before changing your portfolio allocation, consider these factors for investing safely in retirement:

1. Longevity

Take a look at your family history to determine how long you expect to live. Consider your health, lifestyle habits, and genetics. If you expect to live into your late 90s or 100s, you may want to consider investing more aggressively and keeping more investments in the stock market.

2. Current retirement savings

What does your current portfolio look like? If you are approaching retirement and scrambling to have enough cash to last through your retirement, you may want to keep more money in stocks. If you have a comfortable nest egg and feel that your savings are enough for your retirement, it may be best to stick to a more traditional approach.

3. Estate planning goals

If you feel like you have prepared financially for your own retirement, but you want to continue building wealth to leave as an inheritance or to donate to a good cause, it may be a good idea to stay in the stock market longer.

4. Interest rates

When inflation rises faster than interest rates, investors can lose money when keeping it in low-interest-bearing accounts or bonds. When this happens, it is better to invest in low volatility, dividend-paying stocks that will result in better returns with minimal risk.

Contact a Financial Advisor

Each person’s financial situation and investment portfolio is going to look different. When determining your own approach, contact a fiduciary financial advisor who can help you determine your best retirement plan, no matter your age or current financial situation. A financial advisor can help you assess your risk tolerance and retirement timeline to invest safely for retirement.

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