Long Life Is a Blessing...and an Opportunity


  • Invest early and often.
  • Consider all of your investment options such as alternatives, target date funds and annuities.
  • Combine active and indexing strategies for more diversification.
  • Use your longevity to ride out market cycles.

Americans are living longer today than any generation prior — one of the most breathtaking human achievements of our age. And with longer life comes more years in retirement. That means your retirement portfolio has to be prepared to work as hard as you have over the years — and, ultimately, to live as long as you do.

Investing for a retirement of 20+ years is complicated in the current environment of low bond yields, slow economic growth and volatile equity markets. Truth be told, the old rules of retirement investing no longer apply. Following are few considerations to help you make the most of your longevity:

Invest early...and often. This advice resonates now more than ever as Social Security and pensions take a back seat to personal savings as retirement income sources. Importantly, saving for retirement is a lifelong marathon, not a sprint in the final 5, 10 or even 20 years. Allotting small amounts over time is often much easier to bear than having to play catch-up later in life.

Reach Your Goals

Go beyond bonds. Government bonds were retirees' go-to source for safety and income in the past, but times have changed. With Treasury yields at record lows, they are not likely to outpace inflation over time — and that's a major risk in itself. If all or most of your retirement portfolio is in "safe" bonds, investors today have to consider if they realistically can live for 20 or more years with virtually no return. Retirees need to seek income through investments such as stocks with a history of paying and growing dividends.

Inflation Erodes Living Standards

Fear not alternatives. Many investors fear the idea of "alternatives," which are often seen as too risky, particularly for a retirement portfolio. But the new world of investing requires a new way of thinking about diversification. Alternatives can provide a source of income and also have been show to help reduce the volatility of a portfolio because of their lower correlation to more traditional assets.

Combine active and indexing. Diversification encompasses more than asset class choice; you can diversify your investment vehicles as well by adding an allocation to index products, such as exchange-traded funds (ETFs). ETFs combine the features of mutual funds and individual stocks and offer the benefits of tax efficiency and transparency of cost and holdings. The more diversified a portfolio, the better equipped to weather market cycles throughout the years. Explore iShares Exchange Traded Funds for more on ETF strategies.

Target the future you want. It can be intimidating to build a diversified portfolio aimed at life's biggest financial goal — retirement. Target-date and target-risk funds remove some of the guesswork. These multi-asset-class funds come in a variety of flavors, with target-date products geared toward a specific investment time horizon and target-risk funds based on an investor's tolerance for risk (from conservative to aggressive). Explore LifePath Portfolios for more on our Target Date Fund strategies.

Consider annuities. Annuities are important retirement planning tools that can provide a steady stream of income throughout your retirement years. Different types of annuities can offer access to an account value, payments for a specific number of years or predetermined growth potential. Talk to your financial professional about your options.

Remember, time is on your side. Long life means you have the longevity to ride out market cycles, allowing you to look past the traditional retirement assets and take advantage of opportunities for enhanced income and growth potential. Investment in equities, commodities and alternatives can help you generate income for your portfolio and deliver returns that will help ensure your long life is a blessing — and not a financial burden.


1 UN population survey, 2010.
2 OECD Health Data: Health expenditure and financing, OECD Health Statistics (database).
3 Fidelity Investments, as of June 2012.

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