Layin’ It on the Line: Beyond the 60/40 portfolio — Rethinking retirement investing in volatile times

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Lyle BossFor decades, the 60/40 portfolio — 60% stocks, 40% bonds — was the gold standard for retirees. It offered growth with stocks, stability with bonds and a decent chance of sleeping well at night.
But the financial world has changed. The last few years have shaken retirees’ confidence in that classic formula. Stocks swing wildly, bonds no longer provide the steady cushion they once did and inflation adds insult to injury.
So is the 60/40 dead — or just in need of a makeover?
Why the 60/40 struggles today
Historically, stocks and bonds moved in opposite directions. When stocks fell, bonds usually rose, smoothing out returns. But in 2022, both stocks and bonds fell together, leaving traditional portfolios down sharply.
Add in today’s higher interest rates and persistent inflation, and many retirees wonder if their “safe” portfolio is really safe at all.
Rethinking risk
The first step is acknowledging that retirement investing isn’t about chasing returns. It’s about managing risks — market risk, longevity risk and health care risk. A portfolio that loses 20% when you’re 35 is recoverable. At 75? Not so much.
Alternatives to consider
- Dividend-paying stocks: These can provide steady income even when markets wobble. Think of them as your portfolio’s paycheck.
- Annuities: Not always popular, but worth considering. Fixed index annuities, for example, can provide downside protection while still offering growth potential. The guaranteed income features can act like a personal pension.
- Treasury inflation-protected securities, or TIPS: These government bonds are designed to keep up with inflation, protecting purchasing power.
- Cash reserves: It may sound old-fashioned, but having one to two years of living expenses in cash can prevent you from selling investments at a loss during downturns.
- Alternative assets: Real estate, commodities or even structured notes may play a role — but these require careful understanding and aren’t for everyone.
The role of flexibility
A rigid 60/40 allocation may not serve retirees in today’s environment. Instead, think in terms of buckets:
- Short-term bucket: Cash and very safe investments for near-term spending.
- Medium-term bucket: Income-producing assets like bonds, dividend stocks or annuities.
- Long-term bucket: Growth-oriented investments to fight inflation.
This approach provides both stability and flexibility.
The emotional side of investing
Here’s the truth: Investing isn’t just about numbers; it’s about peace of mind. A portfolio that looks great on paper but keeps you awake at night isn’t a good plan.
Retirees need strategies that allow them to weather volatility without panicking or pulling out at the worst time.
The bottom line
The 60/40 portfolio isn’t dead; it’s just not the whole answer anymore. Retirees need to adapt to today’s realities with diversified strategies that protect against downside risk while still delivering growth.
Because in retirement, success isn’t measured by beating the S&P 500. It’s measured by knowing your money will last as long as you do.
Lyle Boss, The REAL BOSS Financial, endorsed by Glenn Beck as the premier retirement advisor for Utah and the Mountain West States. Boss Financial, 955 Chambers St. Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.