Do You Have Too Much In Stocks? Fidelity Warns Boomer Investors to Check Allocations

Fidelity just issued an interesting report warning baby boomers that they may have too much invested in stocks in their 401(k)s.

It’s been a long bull market and the market has given investors a good ride. But good times don’t last forever, warns Fidelity, so now may be a good time to consider dialing back the risk.

Fidelity recommends that investors 10 years away from retirement keep up to about 70% of their 401(k) portfolio in stocks.

Yet, one-third of investors studied had more than that amount, leading Fidelity to caution them about taking on unnecessary risk.

In fact, one-tenth of boomers had 100% of their portfolios in stocks, which could lead to damaging and perhaps irrecoverable losses in a downturn.

Yet another 5% had no stocks at all in their workplace retirement accounts, which can lead to too little growth and a whole different set of problems.

Investment Tips: If you haven’t looked at your account in a while, check your investment allocation to make sure you’re not underweight, or overweight, stocks. Yes, stocks have done great, but don’t court more risk than you can handle if the market does turn down.

Keeping tabs on your allocation is especially critical when you’re a few years away from retirement, or in retirement and making periodic withdrawals. A major pullback toward the beginning of your retirement can be hard to recover from.

Now is a good time to rebalance, or readjust portfolios, to make sure your allocation is still on target. We’ll be rebalancing client portfolios as we near year-end, and will also be checking capital gains and losses to trim your tax bill.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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