Best investment strategies for baby boomers today

By Barry Glassman, CFP
WTOP Financial Contributor

WASHINGTON — If bigger is better, then the baby boomers, some 76 million strong and the largest generation in U.S. history, can consider themselves large and in charge.

This generation, born between 1946 and 1964, has wielded influence on just about every aspect of American life and continues to do so. Boomers have more discretionary income than any other age group and control some 70 percent of the total net worth of all American households.

But even with this financial firepower, many boomers face some serious threats to their financial health as they enter their retirement years.

Almost half of boomers haven’t saved enough to provide for a comfortable retirement. And unlike past generations, boomers might have up to 30 years of retired life ahead of them.

It’s a problem that’s been made worse because many boomers’ wealth and retirement savings were set back by the bear markets of the dot-com crash and the more recent financial crisis.

However, the low-interest rates the Federal Reserve used to breathe life back into a flailing economy present the greatest challenge for boomers looking to retire.

The cartoon in this article is one I commissioned back in May 2010, and it says it all: Boomers and retirees have been in a yield drought for far too long.

It continues to be a challenging investing environment for those close to or in retirement.

Stocks are not cheap; bonds yield next to nothing and the markets continue to be volatile, all of which adds anxiety to uncertainty at a time in life when boomers are looking for more security in their investments.

What’s a boomer investor to do when he can’t tolerate the volatility or afford the potential 30 percent, or more, loss to a portfolio in the stock market, but needs greater returns than the paltry yields on less-risky bonds?

Many investors don’t realize that a portfolio doesn’t have to look like a barbell, with cash and bonds on one end and stocks on the other. Several investments have the potential to provide risk and reward greater than bonds, but less than stocks. I like to call them “the stuff in between.”

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