The contribution limits are higher now. Continue Reading. No rule of thumb works for younger investors who couldn't bear to look at their k statement during the bear market.
Investing legend Warren Buffet predicts the U. This means rebalancing periodically and shifting assets from one class to another. One rule of thumb advises that if you subtract your age from the number , you can determine what percentage of your assets should be in stock.
You might also be relying on a rule of thumb that a bear market sticks around for two years and a bull market lasts five. Instead of relying on this rule of thumb, estimate your retirement expenses and formulate a budget. Here's a "quick summary":. Because bear markets might last three years or longer, you need at least five years of living expenses in liquid investments during retirement, so you can avoid selling stocks at the worst possible time.
If you're planning to retire soon or even decades from now, you may be relying on rules of thumb to make important decisions. Before the bear market, a few financial experts were making matters worse by using minus your age as a rule of thumb. It is your inflation-adjusted target. It assumes that stocks, over the long run years or more , will produce annualized returns of roughly 7 percent.
Rebalancing in a k won't cause you a tax problem. Some dismiss this approach as too conservative, but others argue that it's appropriate for today's retirees who are living longer and want manageable levels of risk in their portfolio. Furthermore, if your income is too high, you'll pay taxes on your Social Security benefits. Another questionable rule of thumb is that when you're ready to retire, you should collect Social Security benefits as early as possible.