Conventional wisdom holds that you should be shifting your investment portfolio from stocks to bonds as you near retirement. Bonds won’t lose as much as stocks, in a bad year, so they’re safer. In addition, they provide more current income.
However, as retirees become long-term investors, this tactic may not make sense. Officially, the average life expectancy is now 80 for men and 84 for women; many people can expect to live into their late 80s, 90s, or even longer.
Thus, if you retire at 60 you may realistically have to anticipate a 30-year retirement. What’s more, you shouldn’t plan on spending down all your retirement money in 30 years. Instead, your goal should be to build a perpetual fund and not deplete your assets. That way, even if you live to 95 or 100 or longer, going decades without a paycheck, you’ll still have a portfolio that can provide you with a comfortable lifestyle.
