There is a huge group of Americans who are over 50 and who are far short on their retirement plans. It is very likely millions of people. This week has been a portfolio makeover week from Christine Benz of Morningstar and the new group comes down to a couple who are ages 56 and 57 and who have raised three kids now in their 20’s while enjoying many of life’s comforts. The couple owns their house and both are gainfully employed. It is a common story. There is just one small problem, they don’t have a clue about the “when, where, and how” pertaining to retirement.
The couple has 401(k)s at both of their employers, a rollover IRA, and some taxable savings spread 45% stocks, 30% bonds, and the rest in cash. The husband’s largest holding has been the Fidelity Contrafund (FCNTX) for years. The husband also holds a large stake of stock in his industrial-manufacturing firm where he is a manager.
The couple currently has a savings target of $3,000.00 per month with a possible retirement date of 2019. With some changes, Morningstar’s calculator shows an 80% of the company being able to retire successfully. Morningstar has a full portfolio makeover analysis in more detail on this matter.
We had two other scenarios we followed from Morningstar’s Christine Benz and her retirement portfolio makeovers this week. First, there is a retiring-early portfolio makeover that moves from stocks to a more balanced portfolio. The other scenario from Morningstar is another common scenario that feels almost too conservative. Much of America is at risk because they are being too conservative with retirement investments.
JON C. OGG
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