Baby Boomers need Short Term Luck for Long Term Survival in Retirement

Baby Boomers are forever being told to invest their nest eggs in risk-based investments for the long term. But you could be committing financial suicide unless you understand you will need short term luck for long term survival in retirement. It doesn’t matter how long you have been investing in your Risk-Based Invesments nest egg. The day you retire and start to draw a pension and stop contributing to your nest egg everything changes.

It is important to understand this and make sure your financial planner understands this too. Your long term begins the day you retire. But initially short term market volatility can have an adverse affect on your retirement nest egg.

What is different in retirement is you need short term luck with a few years of good returns to get you into the long term for your retirement success. If this does not happen in the first few years your nest egg may sustain losses too large for it to recover from, no matter how long you live.

At 25, 40 or even 50 you have some chance to recover over the long term because you are still contributing to your nest egg and you are not drawing a pension from it. But at the point of retirement this all changes and there is no more time to recover to get into the long term and there may be no other funds to invest to recover your nest egg’s capital.

You may say that you intend to continue working. That’s fine, but what if you can’t work or can’t find work. As we get older our insurance premiums go up because we are more likely to become ill or get injured. If the insurance industry knows this we should take notice. Why risk it if you don’t have to?

Baby Boomers will need short term luck for long term survival if they continue to believe that putting all their retirement nest egg in risk-based investments makes sense after  they retire. They may need short term luck too if they are relying on staying healthy in retirement so they can continue working. Both are high risk strategies in retirement. There are ways to manage and control risk in retirement. It is in your long term interest to find out how.


One Response to “Baby Boomers need Short Term Luck for Long Term Survival in Retirement”

  1. […] classes. If we have saved enough all might be well. But even if we think we have saved enough an extended bear market can wreck our retirement plans unless our nest egg is actively […]

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