These 15 Reasons Can Get You Broke During Retirement

You Abandon Stocks

For those who survived (or are still recovering from) the Great Recession, it’s burned-in knowledge that stocks can be a risky investment. After a series of wild market swings in 2018, the benchmark Standard & Poor’s 500-stock index ended the year in the red, down 6.2%. The tech-heavy Nasdaq Composite index actually fell into a bear market last year, defined as a drop of 20% or more from a recent peak. It’s scary to watch your nest egg shrink as you head into retirement, and the kneejerk reaction may be to pull all of your money out of stocks.

That would be wrong. Retirement experts say you’ll likely need at least some of your savings in stocks throughout retirement for diversification and growth potential. Consider this: Despite 2018’s woes, the S&P 500 gained an astounding 276.9% since the market bottomed out in March 2009.

“While there is no one-size-fits-all answer for what your stock allocation should be in retirement, for most people, stocks should account for anywhere from 40% to 60% of their portfolio in the years just prior to and after retirement, with the rest invested in bonds and cash,” says Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation and author of The Charles Schwab Guide to Finances After Fifty. “Where you fall on that range depends on your personal tolerance for risk, how much you expect to rely on your portfolio for income, and your anticipated longevity. But the important thing is to have some opportunity for growth that will outpace inflation.”