Nearing Retirement in a Market Decline

Physician's Money Digest, January31 2004, Volume 11, Issue 2

If you're looking at the unstable nature of the current market and retirement isn't as far away as it used to be, don't panic. Experts suggest that your best bet is to stay the course and keep to your plans, which should include realigning your portfolio to reflect your age. As you get closer to retirement, your portfolio should become less stock oriented, and therefore, less risk oriented.

Money magazine recommends that if you're planning to retire within 10 years you should have 40% in large stocks, 15% in small stocks, 15% in foreign stocks, 25% bonds, and 5% cash. Diversification among a variety of stocks is ideal, with bonds in Treasuries and some money in commodities like gold. Most importantly, don’t give in to the urge to sell after a market drop. You may even want to buy some stocks while the prices are low.