How Much Risk Should I be Taking During Retirement?

Investing during your retirement years is definitely different than during your working years. During your working years you have the luxury of not needing your money to pay for your lifestyle. Instead, you are saving and building your wealth. But when you enter the Retirement Redzone, which is the 5 years before retirement through the first 5 years after retirement, you don’t have time to make up for mistakes. Time is not on your side and so your investment philosophy has to change from growing your money to how to take an income from it and make it last.

The Rule of 100


One of the cornerstones of good financial planning for close to a century has been the rule of 100. Based on this rule, a prudent person should not have an exceptionally high amount of money “at risk” as they get older. To determine the maximum amount of money you should have “at risk” in the markets as a general rule just follow this formula:

100 – Your Age = Maximum %.

So, if you’re 56, then your maximum allocation to risk strategies should be limited to 44% (100 – 56 = 44%). If you are 70, then you should have at most 30% of your money at risk and 70% in principal protected investments. You can tell that the dial moves to less risk as you get older.

The rule of 100 is a general rule of thumb to provide an estimate only; individual circumstances and objectives will vary.

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MORE COMMONLY ASKED QUESTIONS

To succeed in retirement, it is important to fully understand your current situation and work with a financial planning firm that will make sure your assets are properly invested and managed.

How much risk should I be taking during retirement?

How do I know when to retire?

Will I run out of money?

How do I develop an income plan?

What should I do next?

How do I stop losing money in the market?

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