July 01, 2013

Investing by Seniors: Strategies for Avoiding Exploitation and Preparing for the Future

Karl J. Ege

We are seniors. We have worked diligently for more than 40 years. We have regularly contributed to our profit-sharing, 401(k), HR-10, or similar defined contribution plan throughout our working days. We may also be fortunate to be beneficiaries of a defined benefit pension plan that provides us with an assurance of a certain level of income for the rest of our lives. We are entitled to Social Security benefits, and we may have aggregated a portfolio of assets outside of our tax deferred plans from which we intend to receive financial benefit as our working days with regular income draw to a close.

At present, a large percentage of investment wealth is held by those over the age of 65. The latest data show that the median wealth (one-half above and one-half below) of those between the ages of 65 and 75 is $206,000, and of those over 75, $216,000; the mean (or average) wealth for those groups is $848,000 and $648,000, respectively, which demonstrates that many in these groups have significant wealth. For those seniors with above average wealth, a sizeable portion of their assets are in tax deferred pension plans or investment portfolios.

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