Dean Barber of Barber Financial Group said, “Buy and Hold is Outdated“. He adds, “you should remember to take profits and redeploy them into lesser-risk, low-expectation areas”.

You can read his article on Yahoo Finance called, “Protecting Your Nest Egg in Recession” written by Laura Bruce from Bankrate.com.

In keeping with my own beliefs this is the right strategy we Baby Boomers need to adopt in retirement. It makes no sense to me to sit and watch my nest egg lose 40% of its value and then be told I should wait 5-7 years for it to come back - when I need it right now!

The article also talks about the need to have a written plan and to know when you will exit the market in a downturn. We all tend to focus on returns and ignore risk. The need to avoid large losses entails assessing the risk in any investment and deciding what action we will take if the investment does not work out.

Buy and hold is not the answer when in retirement. We need to use defensive strategies to protect our investment and keep out nest egg safe. The returns in a bull market will not be as good, but the losses in a bear market could be substantially less.

This will leave you with more money to earn returns when the market turns bullish again. You won’t be recovering your losses from the recent bear market. Remember most Baby Boomers who retired in 2000 have not recovered their nest egg yet and may never recover it as they draw a pension.

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The Teeter Totter Principle is all about using a “seesaw” to balance your Nest Egg’s cash and investments. Greg Heiple a financial planner, created the Teeter Totter Principle for managing your Retirement Nest Egg after seeing what happened to some of his clients in the 2000-2003 stock market down-turn. He gives an example of of a couple retiring in 1999 and doing all the recommended things with their Nest Egg but ending up losing 30% of their Nest Egg by 2003. He realised there must be a better way to manage his clients Nest Eggs in retirement. His research led to the creation of the Teeter Totter Principle.

Don’t be fooled by its simplicity. It is a great tools for protecting your Nest Egg in Retirement.

The Teeter Totter Principle has several benefits for Retirees:

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If you are a Baby Boomer AND in or near retirement your Financial Advisor should be advising you on how to protect your Nest Egg in Retirement. If they are not actively working with you to control your Nest Egg you could be in serious trouble.

With the financial markets in turmoil and the stock markets tumbling, if your your Nest Egg is in the Stock Market it is likely to be down 20% or more. Do you understand that if you are drawing a pension from your Nest Egg, then being down 20% or more is critical to the long term survivability of your Nest Egg.

Craig L. Israelsen, Ph.D. is an associate professor at Brigham Young University. In his article The Math of Recovery in Retirement Portfolios he states “The Primary Goal of a Retirement Portfolio is very simple; avoid large losses.” If your financial advisor isn’t telling you this, there is a problem. If you suffer large losses just as you start taking a pension from your Nest Egg you could be in serious trouble. This article shows you just how much trouble. I recommend you read the article in full.

10 Questions you should ask your financial advisor:

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