I am 61 years old and have $900k in my 401(k) account and $800k in a money market account. How do I invest?

Ask a Counselor: I'm 61 and have $900k in my 401(k) account and $800k

Ask an Advisor: I’m 61 and have $900K in my 401(k) account and $800K “sitting in a money market account”. How do I invest?

I have $800,000 in a money market account because I don’t know what to do with it. I was hoping I could put it into something that could generate 4-5% growth. I also have $900,000 in my 401(k) that is in low risk accounts with Vanguard. I will be 62 later this year and cannot afford to lose or go back to what happened to me in the early 2000s.


I completely understand your concerns here, Kevin. I’ve worked so hard to accumulate these savings and it’s scary to think of taking a risk on something as unpredictable as the stock market. I think it’s important to respect these concerns while also understanding that there are risks to being too conservative as well. The ultimate goal is to find a balance that works for you. (And if you need help choosing the right asset allocation and investment plan for your risk tolerance, Consider working with a financial advisor.)

I respect your upset

First, it is important to give proper respect to your concerns about the stock market. Investing is much more than just numbers. Investing is an emotional endeavor and the feelings you have about it matter.

Remember that consistency is one of the hallmarks of a successful investment plan. Sticking to your plan through the ups and downs rather than giving in to the madness of the day is one of the best ways to ensure your money lasts as long as you need it.

While I’m not encouraging you to give in completely to fear, it’s important to acknowledge that. It is possible that dismissing or minimizing your concerns will result in a strategy that does not really fit your investment personality, which in turn can lead to a risky investment Emotional decisions that negatively affects your returns. (And if you need help assessing your risk tolerance, Consider working with a financial advisor.)

The other side of risk

At the same time, it’s important to realize that a stock market downturn isn’t the only risk you face. There is also a risk of being too conservative.

the 4% the norm – which basically states that you can withdraw 4% of your investment portfolio each year in retirement with little risk of running out of money – is based on a portfolio that is 50% stocks and 50% bonds. Bill Benjen, who did the original research, actually looked at more conservative portfolios with between 0% and 25% equity as well, and found that they weren’t likely to last long.

In other words, being too conservative with your portfolio actually reduces the odds of it sticking around for as long as you need it to.

Part of this is due to economic inflation. You need your money to grow just to keep up with inflation and to allow you to continue being able to afford the same expenses you’ve always had. If your goal is to make sure you have enough money to support yourself for the rest of your life, research says that a large stock allocation is generally the right move. (And if you need help building an investment portfolio that aligns with your risk tolerance, Consider matching with a financial advisor.)

Finding the right balance

When I work with clients, I try to stress that there is no “right” answer here. There is no perfect solution that will give you the exact return for the exact level of risk.

Instead, the goal is to land on something good enough. You want a portfolio that is not so conservative that it causes you to fall behind on your goals, and not so aggressive that you take on more risk than you are comfortable with or can handle.

If you are looking for something that provides 4% to 5% interest with little to no downside, you can get it now from some Savings accountsAnd money market financing And Certificates of deposit (CDs). However, these rates will fluctuate, unless you lock out a long-term CD, so you may earn more or less depending on general economic conditions. And this strategy will definitely fall on the conservative end of things, which could end up hurting you in the long run.

Alternatively, a diversified portfolio of 60% stocks and 40% bonds It probably has a long-term expected return of 6%-6.5%, although of course this can vary greatly from year to year. Personally, I like to put my clients in a mix of index funds which tracks the US and international stock markets, as well as the US and international bond markets.

If you need more help, don’t be afraid to ask. Investing can be scary and confusing, and sometimes the peace of mind and behavioral training offered by a good financial advisor can be worth the cost. (And if you need help finding a counselor, This tool can help you match with one.)


Just know that whatever you do, there will inevitably be ups and downs. Whatever you do, there will always be a different strategy you could have chosen that would have worked better. If you can make peace with these things and stay consistent with your “good enough” plan, you’ll be in good shape.

Tips for finding a financial advisor

  • If you need help building an investment plan that is appropriate for your risk tolerance and goals, a financial consultant I can help. Finding a financial advisor doesn’t have to be difficult. Free SmartAsset tool It matches you with up to three vetted financial advisors serving your area, and you can interview your own advisors at no cost to determine which one is right for you. If you are ready to find a counselor who can help you achieve your financial goals, let’s start.

  • Consider a few advisors before settling on one. It is important to make sure you find someone you trust to manage your money. When you consider your options, These are the questions you should ask a counselor To make sure you make the right decision.

Matt Baker, CFP®, is a SmartAsset financial planning columnist and answers readers’ questions on personal finance and tax topics. Do you have a question you would like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Matt is not a participant in the SmartAdvisor Match platform, and has been compensated for this article.

Photo credit: © iStock.com / FG Trade, © iStock.com / insta_photos

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