Consequently, investors nearing retirement age should begin thinking about their risk exposure to a long up-trending stock market.
Traditionally, young workers would heavily tilt toward stocks and gradually diminish equity exposure in favor of more conservative fixed-income assets when nearing retirement age. For instance, according to Fidelity’s target-date funds, a 50 year old who will retire in 17 years would have a stock allocation of about 84%, with 59% U.S. stocks and 25% international stocks. Meanwhile, a 59 year old would have 70% stocks, with 49% U.S. and 21% international. [ETF Investors Shouldn’t Overlook Rebalancing]
While it is fun to ride the stock market bull rally, people in their 50s should reassess asset allocation to diminish the negative impact of a market downturn, especially as one nears retirement age.
“What happens if [the market]corrects?” Fisher warned.
For more information on investing toward retirement, visit our retirement category.
Max Chen contributed to this article.