Just beginning to think about what you need to do may be the hardest step. If you're in your 50s, you might be stuck in what McCarthy calls the "dead leaf" syndrome. You're looking ahead to a time when you're no longer needed—to avoid feeling like a dead leaf about to be swept to the curb—you might be tempted to ignore your retirement portfolio altogether. That would be a mistake.
Ignoring your portfolio could come at a high cost if history catches you at the wrong moment. At the end of 2007, investors were woefully weighted with stocks, according to the Employee Benefit Research Institute. Nearly 1 in 4 Americans ages 56 to 65 had more than 90 percent of their account balances in equities at year-end 2007, and over 2 in 5 had more than 70 percent. Equities declined nearly 40 percent the following year, wiping out billions in retirement savings for many retirees. It forced many near-retirees to delay stepping out of the workforce.
The typical retirement-age couple walks in the door with portfolios overweighted in equities, said Tim Maurer, director of personal finance for the St. Louis BAM Alliance, which represents 142 independent investment advisors nationwide. "Typically, we are dialing it back," he said.
Now, as the economy hums along and the market rises, it is a good time to bulletproof your portfolio against the volatility that can strike at any time.
Building a solid nest egg: It's location, location, location