Although stocks were once considered too risky for many pension funds, it never ceases to amaze me how many financial advisors continue to recommend risky stock market investments for the portfolios of those who are close to retirement age.
It’s especially concerning considering that, since the turn of the century, fixed-income investors have achieved average returns similar to those of buy-and-hold stock market investors.
In fact, in May of 2019 CNBC’s Sr. Markets Commentator, Mike Santoli, compared the total return of the S&P 500 with that of the iShares IBOXX Investment Grade Corporate Bond ETF (LQD) over the previous 12 month period to reveal that the bond fund had actually outperformed the S&P 500 during that time—with a much smoother ride for fixed-income investors.
In a way, fixed-income investors were able to put their portfolios on “cruise control” and not worry if stock market volatility would wipe away half of their retirement savings like it did for so many investors in the market crashes that started in 2000 and 2007.
The bottom line is that the markets have had a good run lately, and although they could climb slightly higher, there’s also a good probability that we could see another major stock market correction in the near future.
What all this means, for anyone who is retired or nearing retirement, is that now might not be the best time to gamble your retirement future in an uncertain stock market.
Instead, check out the website to find an Income Specialist in your area who can help you reduce your exposure to stock market risk, so you can use your retirement savings to establish ongoing streams of income for retirement.