Even older retirees need to invest in stocks for growth in order to protect the value of their purchasing power during periods of rising inflation. I’ve talked to retirees who tell me they can’t invest in stocks as they won’t have enough time to “make up the loss” if there’s a market correction. There will always be market corrections–in both the stock and the bond markets.
Here’s the thing, even if you’re retired, you’re not going to need access to your whole portfolio the day you retire. The majority of seniors are going to enjoy many years of retirement due to the advances in medical technology. They DO have the time to let their portfolios recover, especially if they pare back the distributions they take from their assets a bit. The economic downturn of 2008 is still fresh in investors’ minds. Many are deathly afraid of investing in stocks as they watched the stock portion of their retirement portfolio decline 40-50%. I grant you, it was a scary time.
In 2008, I had 200 clients and my phone was ringing off the hook. Investors saw huge “paper losses” on their statements. Of all those clients, I talked all but one “down off the ledge” and persuaded them to “hold on”. I had one client who insisted that I sell everything and go to cash. As soon as I placed the trades, those paper losses became actual losses. All those investors who “held on” recovered nicely and made a great profit, in fact.
To this day, that one gentleman kicks himself for panicking and insisting that I sell all his positions.