The Hill News

It’s not a good time to be a Baby Boomer. The generation is on the cusp of becoming the largest population of retirees in U.S. history and there has never been a worse time to plan for retirement.   
 
The goal for any retiring Boomer is straightforward: design a portfolio that generates enough income to sustain a certain lifestyle, post-retirement. This has traditionally meant finding securities that offer capital preservation and incomeâ€"basically, bonds. In the current environment, however, the conventional balance between risk and return has been disrupted.
 
With yields at historical lows that are barely keeping pace with inflation, the risk-return tradeoff could not put retirees in a worse position.  If an investor buys a 10-year U.S. Treasury note, today, the payoff would be 1.72% before tax. Accounting for inflation (expected at 2.3%), the investor actually loses purchasing power the longer the bond is held.

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