To be sure, making a major and permanent shift to a much more conservative asset allocation strategy can make a real difference in your overall risk profile.
As for the question you addressed to Michael for those at or near retirement, I would suggest a more conservative asset allocation.
He also says that in order for investors to control their risk exposure they should consider a more conservative asset allocation, with a larger focus on fixed income and less on equities.
Even if you decide you need a more conservative asset allocation (with more bonds or cash equivalents and fewer stocks), you can do it within your individual retirement account or 401 k), without incurring the tax on retirement account withdrawals, plus a possible 10% early withdrawal penalty.
The situation isn't much better for those who are now living off of older AllianceBernstein target-date funds, which are supposed to have more conservative asset allocations.
The discrepancy, which I first noticed in a Forbes article, points to two challenges for the increasing number of people with 401(k) or similar accounts who are using target-date funds, where fund managers divide money among stocks, bonds and other assets and make that allocation more conservative as you age and get closer to needing the money.
By early 2000, his allocation became more conservative, with half in equities and half in bonds.
Traditional advice has said that as you approach retirement you should reduce your exposure to stocks and increase your allocation to more conservative fixed income investments, such as bonds and bond funds.
Will it be obvious, for instance, how quickly the allocations become more conservative?
