At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
Age 70 – 75: 40% to 50% of your portfolio, with fewer individual stocks and more funds to mitigate some risk. Age 75+: 30% to 40% of your portfolio, with as few individual stocks as possible and generally closer to 30% for most investors.
Indeed, a good mix of equities (yes, even at age 70), bonds and cash can help you achieve long-term success, pros say. One rough rule of thumb is that the percentage of your money invested in stocks should equal 110 minus your age, which in your case would be 40%. The rest should be in bonds and cash.
If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement.
The general rule is that the younger you are, the more risk you're able to tolerate. The older you get, though, means you must cut back on the amount of risk in your portfolio. The common rule of asset allocation by age is that you should hold a percentage of stocks that is equal to 100 minus your age.
Keeping 20 to 30 percent in stocks is a way for even a conservative investor to maintain some opportunity for growth and keep up with inflation. So while it's smart to have more in cash in your older years, maintaining a diversified portfolio is a strong hedge against uncertainty at any age.
What is the safest investment for seniors? Treasury bills, notes, bonds, and TIPS are some of the safest options. While the typical interest rate for these funds will be lower than those of other investments, they come with very little risk.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
If you retire with $500k in assets, the 4% rule says that you should be able to withdraw $20,000 per year for a 30-year (or longer) retirement. So, if you retire at 60, the money should ideally last through age 90. If 4% sounds too low to you, remember that you'll take an income that increases with inflation.
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
It's never too late to start investing
The truth is that no matter what your age is now or when you began working, it is never too late to start. Many people are hesitant to enter the stock market due to a fear of making mistakes or losing money. However, with knowledge and understanding comes confidence.
Some financial advisors recommend a mix of 60% stocks, 35% fixed income, and 5% cash when an investor is in their 60s. So, at age 55, and if you're still working and investing, you might consider that allocation or something with even more growth potential.
In this regard, as one of the basic rules of financial planning, the asset allocation or 10-5-3 rule states that long-term annual average returns on stocks is likely to be 10%, the return rate of bonds is 5% and cash, as well as liquid cash-like investments, is 3%.
Options for low-risk investments and savings include CDs, fixed annuities, money market accounts, savings accounts, CDs, and treasury securities. Amongst these options, fixed annuities typically offer the best interest rates.
The 4% rule is easy to follow. In the first year of retirement, you can withdraw up to 4% of your portfolio's value. If you have $1 million saved for retirement, for example, you could spend $40,000 in the first year of retirement following the 4% rule.
“This size will vary, but it is generally recommended that a retiree have a portfolio size of at least $500,000 before considering moving away from investment products and investing directly in stocks and bonds.”
Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.
So looking at the table, you can see that a 60-year old male will need a lump sum of almost $500,000 to provide an annual income in retirement of $42,000 for 20 years. These calculations are based on a 20-year time frame because the approximate life expectancy for Australian males is 84 years and 88 for females.
For many retirees with modest post-retirement spending plans, balanced investment strategies and full Social Security benefits, $500,000 may last the entire length of retirement.
As Americans expect to live longer lives, the anticipated price tag of a comfortable retirement continues to climb. On average, Americans say they'll need at least $1.27 million to afford a comfortable retirement in which they can relax, spend time with family and travel.
Yes, you can retire with a million dollars. However, it is essential to remember that your lifestyle may change, and you may have to adjust your spending accordingly.
The Bottom Line
A retirement account with $2 million should be enough to make most people comfortable. With an average income, you can expect it to last 35 years or more. However, everyone's retirement expectations and needs are different.
High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards. For example, government bonds are generally more stable than corporate bonds based on past performance.
“U.S Treasury securities are considered the safest investment option, as they are backed by the full faith and credit of the U.S government. These investments come in several forms such as savings bonds, treasury notes, treasury bills, and more,” Chavez said.
Some options for relatively safe investments include high-quality bonds, certificates of deposit (CDs), and money market accounts. These investments are generally less risky than stocks, but also have lower potential returns.