The first five years can trip up your retirement finances permanently

If a retiree can generate enough guaranteed income to cover basic expenses using Social Security, any pension income and annuities, then he or she can invest other savings in stocks, said Steve Vernon, a research scholar at the Stanford Center on Longevity.

Having that cushion means a retiree can ride out any market downturns, he said, and over time, their stock holdings should appreciate. That would effectively increase their overall stock exposure but still give them protection against financial shocks.

A 2014 study of retirement portfolio performance found that over 30 years, a portfolio starting with 30 percent in stocks and rising to 60 percent outperformed a portfolio with a constant 60 percent stock allocation. Both of those portfolios, in turn, outperformed a portfolio that started with 60 percent in stocks and dropped to 30 percent.

“Rising equity glide paths appear to maximize the likelihood of success and sustainable income, and reduce the magnitude of shortfalls when they occur,” concluded the researchers, Wade Pfau of the The American College and Michael Kitces of Pinnacle Advisory Group

Read Full CNBC Article Here…

May 23, 2016 In: Current Affairs, Financial Articles Comments (None)