What I’ve Been Up To

Mailbag Monday: Too late to save?

My husband is working part time driving a school bus. The company is offering a 401(k). My husband is 73 and is in excellent shape so hopefully he could be working there another 5 years or more. What would be safe for him? Conservative investment with part aggressive? We would like to make as much as we can without losing. Also, the company will match a certain percentage.

– Carol

I love this question because it provides a great opportunity for me to point out that it’s never too late to save, or to continue saving. I’m so happy that your husband has decided to participate in this 401(k) because even if he doesn’t earn a penny from his investments, those matching dollars will be a great return. If he contributes 3% of his salary and his company matches 3%, he’s just doubled his investment and that can go quite a way over five years.

That said, we all would like to make as much as we can without losing, and we often can when we have a long time horizon. The risk when you’re very close to retirement is that you won’t have the time to make up any losses, so you really want to stay pretty conservative here. I would invest in a conservative balance fund or a high percentage of balance funds, skewing what he saves heavily in favor of fixed income. You could still have a small stake in equities, but definitely no more than 30% or so if you’re nervous about losing your shirt.