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Are Older Investors Being Too Conservative? A Controversial Look at How We Save for Retirement

By Margaret Manning November 15, 2018 Managing Money

The idea that investors should be more conservative with their money as they get a little older is based on solid investment wisdom. After all, the last thing you want to happen one year before retirement is for your life savings to go up in smoke during a market correction.

This is why many financial advisors (of which I am not!) recommend shifting more of your money into bonds and away from stocks and money market funds in the years before retirement. As a general principle, I’m all for this.

That said, it occurs to me that very few people are talking about the psychological impact of lower returns when it comes to incentivizing us to save more in our 50s or 60s.

Could Higher Returns Redirect Frivolous Spending?

Consider the following examples. According to the Wall Street Journal, Americans spend about $1.2-trillion (that’s trillion with a T!) a year on nonessential items. That’s about $11,000 per family. Yes, I know that this is unlikely to be evenly distributed, but, let’s go with it for illustrative purposes.

Here’s my central question… how much incentive do you have to cut your non-essential spending and save more for retirement if everyone is telling you to invest in bonds, or even less inspiringly, money market funds?

If you are in a “protect your money” mindset instead of a “grow your money” mindset, how motivated will you be to do the right thing and cut the fat out of your budget?

It’s so much more fun just to spend! After all, nobody will criticize you for “living for today” in your 50s, but, invest too aggressively and everyone will tell you how big of a mistake you are making.

I realize that this may be controversial, but, maybe there are times when choosing a more aggressive strategy that might yield you 7-8% can drive action that a potential return of 4-5% (or less!) might not.

Think about it this way. If you are uninspired by your investment prospects, you might go out and buy that new $25,000 Mini Cooper S that you have always wanted. After all, “What’s the point of investing for just 15 years if the returns are so low?”

Instead of losing almost all of your money by buying a new car, maybe it makes sense to risk this money in the stock market. After all, we’re not talking about money that you have already invested here. We’re talking about new money that you probably weren’t going to invest without the proper incentive.

By the way, some quick back-of-the-envelope calculations show that investing $25,000 at 7% (the historical rate of return for the S&P 500 after dividends and inflation) for 15 years could give you around $65,000 to work with. That’s enough to buy a decent camper van or to take a holiday every year for most of your retirement.

Talk to a Financial Advisor About Your Own Situation

To be clear, I’m not trying to encourage anyone to be more aggressive with their investment strategy overall. In fact, I’m not encouraging anyone to do anything… other than to have a chat with a financial professional about whether saving additional money aggressively – instead of spending it on useless stuff! – makes sense.

I hope that this article spurs a conversation about investing after 50. It’s so much more exciting for financial advisors to talk about the power of compound interest over 40 years. But, ultimately, we are the ones that are closest to financial ruin if we don’t get our ducks in a row. And maybe, just maybe, we need to make investments for older adults a little more exciting.

Do you think that investing new money more aggressively makes sense after 50? Why or why not? Please join the conversation! I’d love to get your perspective on this!

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The Author

Margaret Manning is the founder of Sixty and Me. She is an entrepreneur, author and speaker. Margaret is passionate about building dynamic and engaged communities that improve lives and change perceptions. Margaret can be contacted at

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