I’m looking for some advice regarding my 401(k). I panicked in mid-March and moved my investments into a Treasury money market fund. (I know, bad move.) My investments were roughly 65% stocks, 35% bonds.

I want to move my investments back and I am struggling with how and when. I did move roughly 20% back into stocks a couple of weeks ago and had some modest gains. I just turned 60 and plan to retire at 67.


March was a very scary time in the market, acknowledges Steve Cruice, CPA, CFP, owner of Simply Steward. Many people were worried about what would happen.

“You first need to determine whether you need to take on the volatility risk associated with the stock market,” says Cruice. If you have a very large portfolio compared to your living expenses and can retire with your portfolio earning the U.S. Treasury rate of around 0.69% per year, maybe you don’t need to go back to 65% equity/35% fixed income allocation. “However, very few people are able to retire on a portfolio growth rate of 0.69% per year,” he notes.

Given that, the first step is this: Determine how much your retirement is going to cost now and in the future, after the impact of inflation, and incorporate pension and Social Security income, he explains. Then, you can determine what kind of growth rate you are going to need to retire at age 67. “This growth rate will give you a good idea of what allocation between stocks and bonds you may need to reach your goal,” he says.

Once you have determined what that long-term allocation should be for your individual retirement needs, you know how much you need to get back into the stock market. When moving money back into the stock market, you can take two approaches, Cruice says.

The first approach: Put all of your equity allocation back into the market at one time, assuming you have a time horizon of at least five to 10 years. If you don’t plan to touch the stocks for ten years, then whether the market goes down again temporarily in the next six months doesn’t really impact your long-term investment view, Cruice says. The pro to this approach is that if the markets continue going up, you do not miss out on any more of the upside. The con is that the markets could always go down again in the next year. Nobody is able to predict the short-term movements of the market.

The second approach, suggests Cruice, is to dollar-cost average the equity portion of your portfolio back into the market over the next year. “You would put 25% of the portion of your portfolio you want to allocate to stocks over the long-run into the market now, 25% into the market three months from now, at six months, and then finally nine months from now,” he says. The pro to this approach is that if the market declines further, you will be buying throughout the year at the lower prices, which will help your long-term returns. The con, however, is that the market may not go down and you’ll simply continue buying into the market at higher and higher prices.

Got Questions? Get Answers!

Got questions about Social Security, Medicare, retirement, investments, or money in general? Get answers. Email Kim McSheridan assisted with this report.