Nevertheless, I find target retirement date funds pull out of stocks and move to bonds way too early. I’d probably only start moving out of stocks 2-3 years before retirement, based on how long recessions/crashes of the past lasted.
Historically, it looks like the risk of being in stocks as you approach retirement is pretty low. Let’s say you planned on retiring in 2009 at age 65. 2009 hits, stocks fall 50%… if you just continued working for 2-3 more years, your retirement account would be back at fresh all time highs AND you’d be collecting a larger SS paycheck each month when you retired at 67-68. Not exactly tragic.
Historically, it looks like the risk of being in stocks as you approach retirement is pretty low. Let’s say you planned on retiring in 2009 at age 65. 2009 hits, stocks fall 50%… if you just continued working for 2-3 more years, your retirement account would be back at fresh all time highs AND you’d be collecting a larger SS paycheck each month when you retired at 67-68. Not exactly tragic.