Money Monday!

Below, I’ve outlined a couple of quotes I hear frequently about the temptation to always invest based on age. Beneath each quote, I added some planning thoughts that may cause you to think differently.


“I will just invest all my 401(k) in the target date fund based on my retirement age”

This certainly sounds reasonable on the surface.

This strategy may work if all of the client’s retirement assets are in their 401(k), and they have little in other income sources. In other cases, this may be less efficient.

Let’s use an example of a person who retires at age 65, and let’s say this person has either a pension or enough in other non-IRA/401(k) taxable accounts.  We may decide that you should only take your required minimum distribution from your IRA/401(k) in retirement which currently starts at age 72.  Therefore, you should be cautious about which target date fund you pick and perhaps instead consider either picking the target date fund around when you turn 72 or using multiple target-date funds based on your financial plan.


Post Retirement

“I’m 82 years old… I should be conservatively invested, right?”

The answer to this question is… maybe.   IF the client has a moderate-to-high risk tolerance, and leaving money to their heirs is a priority, then they should think twice about investing based on their own age. 

For the client who automatically invests conservatively based on their age, they may be working against their own goal of leaving money to their heirs. By taking a portion of their money that they are extremely unlikely to use themselves and investing that more aggressively, they are more appropriately investing that money based on the age of their heirs, not their own age.

Using Wheeler Financial’s On-Purpose Method™ we direct our clients‘ investments toward the goals they outlined in their financial plan. To learn more, please click the link below.


Since every personal financial situation is different, I advise you seek our advice or the advice of your own financial planner before moving forward with the strategy outlined above.


The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Wheeler Financial LLC and not necessarily those of RJFS or Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  There is no guarantee that these statements, opinions or forecasts provided herein will prove it to be correct.  Investing involves risk and you may incur a profit or loss regardless of strategy selected.  Past performance does not guarantee future results.

RMD’s are generally subject to federal income tax and may be subject to state taxes.  Consult your tax advisor to assess your situation.