How to Invest for Retirement If You’re Over 60 – Kiplinger’s Personal Finance

Retirement planning is a key component in holistic financial preparation for you and your family. However, many people find themselves nearing retirement age with little to show for their many years of work. While it may feel like you are heading toward retirement without the necessary tools in place to provide for yourself, don’t panic.

The good thing about retirement planning is that until the day you retire, you can prepare and optimize, based on the current state of the economy, for potentially greater return. Even if you’re over 60, it isn’t too late to start. In order to maximize your retirement savings and live the life you desire, implement these strategies:

Diversify Your Portfolio

One of the most important facets of long-term investment success is portfolio diversification. This entails having a portfolio with stocks, bonds and other investments, and then diversifying within each of those categories. This is a hedge against losses, and it is an important strategy to boost performance.

In conjunction with this, investors should avoid having any more than 3% of their portfolio in any one stock and invest across a variety of industries. This helps increase the likelihood of that your portfolio will continue to perform well even if one stock or one industry is taking a hit in the market.

Diversifying your portfolio is always important for any investor, but more so for those 60 and older. As individuals inch closer to retirement, their focus should shift toward consistent yield and limiting risk. Younger investors may be able to handle higher risk as they have more time to recover from losses. For those approaching retirement, spreading your money across a variety of investments helps to decrease the likelihood of significant loss and may help to increase the stability of your investments as you get closer to the time you need them the most.

Know Your Portfolio’s Standard Deviation

Many investors focus on using their return on investment (ROI) to determine whether their savings are performing as expected. However, this doesn’t really tell investors what they need to know about their portfolios.

In fact, the metric of focus should be standard deviation, which depicts the portfolio’s risk and how consistent returns have been over time. A low standard deviation indicates greater price consistency than a high one. For context, the relatively low-risk S&P 500 has a 10-year standard deviation of 13.56%, so if you are able to handle this investment losing 13.56% at any given time, you can safely invest in this sector.

If you have a financial adviser, they can help you calculate your portfolio’s standard deviation and provide you with a forecast of potential routes to achieve …….


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