When you retire, you should expect to draw on your investments for as long as 30 years. That means you'll be caught among several investment objectives. Clearly, you cannot afford big losses. Yes, you need dividend and interest income. Most of all, you need growth to protect yourself against inflation.
To achieve these goals, fresh retirees should place at least 50% of their investments in stocks or stock funds. Consider taking a portion of what you have in bonds or in cash and buy an income annuity that pays a monthly benefit for the rest of your life. The older you are at the time of purchase, the larger the payout.
| Row 0 - Cell 0 | 1. Get a Checkup |
| Row 1 - Cell 0 | 2. Set Your Budget |
| Row 2 - Cell 0 | 3. Do a Dry Run |
| Row 3 - Cell 0 | 4. Choose Your Date |
| Row 4 - Cell 0 | 5. Consider an Annuity |
| Row 5 - Cell 0 | 6. Roll It Over |
| Row 6 - Cell 0 | Investing in Retirement |
| Row 7 - Cell 0 | Extreme Early Retirement |
Here are two portfolios suitable for investing in retirement. One is all index funds, which are designed to track a benchmark, such as Standard & Poor's 500-stock index. Index funds require less monitoring than other funds and have lower costs.
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The second is made up of actively managed funds, which, if you choose well, should beat index funds by roughly one percentage point annually. But they require closer attention and are apt to fluctuate in value more than the indexes. All of these actively managed funds are in the Kiplinger 25, our selections of the best stock and bond funds you can buy with no sales charge. See the complete list and look for regular monthly updates in Kiplinger's magazine.
Index-fund portfolio
- 35% Fidelity Spartan Total Market Index (symbol FSTMX)
- 15% Fidelity Spartan International Index (FSIIX)
- 10% Vanguard REIT Index (VGSIX)
- 40% Vanguard Intermediate-Term Bond Index* (VBIIX)
*In a taxable account, substitute Fidelity Intermediate Municipal Income (FLTMX).
Actively managed fund portfolio
- 15% T. Rowe Price Growth Stock (PRGFX)
- 15% Dodge & Cox International Stock (DODFX)
- 10% Bridgeway Aggressive Investors 2 (BRAIX)
- 10% RS Value (RSVAX)
- 10% T. Rowe Price Real Estate (TRREX)
- 20% Harbor Bond Institutional* (HABDX)
- 10% Fidelity Floating Rate High Income (FFRHX)
- 10% Loomis Sayles Bond* (LSBRX)
*In a taxable account, substitute Fidelity Intermediate Municipal Income (FLTMX).
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