The leading edge of the baby boom -- the post-World War II generation that led the way on everything from war protests to yuppiedom and two-income families -- is about to experience another first: post-crash retirement.
With the first boomers turning 64 this year, they have little time to make up their losses from the recent debacle of stocks and housing. Not since the late 1930s have workers on the cusp of retirement faced such a big one-two punch.
With life spans increasing -- and many boomers dreaming of active retirements, among other factors -- some advisers suggest that near retirees keep a sizable holding in stocks. The old adage -- subtracting one's age from 100 to get the proper stock allocation -- just doesn't apply anymore, this camp believes.
"There's a new view coming along (that recommends) a fairly consistent asset allocation as you grow older or even an increase in your equities" portion, says Stephen Brown, a finance professor at New York University's Stern School of Business. "Anywhere from 60% to 40% in equities would be appropriate for all age groups (but not the highly risk-averse), especially the newly retired."
But wait: This is post-crash 2010. Boomers lost a chunk of their 401k savings in the market meltdown because they had invested in stocks. Why should they trust stocks now?
Such views resonate with Susan Graham of Bellevue, Wash. Retired from Microsoft a decade ago, she maintains a 60-40 stock-to-bond portfolio allocation. She and her financial planner arrived at that allocation because she wants her savings to grow and doesn't need the money now.
Currently, she's getting income from Social Security payments, which began last year, and rent from a boarder in her home. To Graham, "stocks' potential for growth is amazing."
Some boomers have already embraced this message.
Already nearly fully retired, New York attorney Alan Naftalis invests his savings roughly 50% in stocks, 50% in fixed income. If anything, he could see raising slightly his stock weighting. He soon expects to buy a country home in upstate New York, ideally on a lake. He'll also need to purchase a car and maybe even a small boat.
"With the new house, my monthly costs will be going up significantly," says Naftalis, who trusts stocks to outperform bonds over the long term.
Continued: Target-fund investors keep investing
