401(k) investments when getting close to retirement
Hi Terry,
I’m 60 and have my 401(k) in a Lifecycle fund (split between 2025 and 2030). But I’m concerned that these funds are still volatile. I’m hoping to retire between 65 and 67. Is there a point when we should be putting money in a stable value fund instead of the L-fund? I would have expected the L-fund to have this stability built in already.
Terry Says
Please read my column on my website where I wrote about this issue over a month ago. It’s called “No Place to Hide!”
You are 5 years from retirement, and the average bear market takes at least 3 years to recover. So you should be ok — BUT if you panic when the market goes lower and sell stocks, you’ll be in more trouble!
There’s an old saying: “Sell down to the sleeping point!” If you don’t have any other savings outside your retirement account, you might sell maybe 25% of your holdings now and put them in a stable value fund or money market fund. Butkeep the money INSIDE your 40l(k) plan to avoid taxes.
