Entering the Retirement Red Zone

Entering the Retirement Red Zone

In the NFL, the term “Red Zone” has come to mean that portion of the field between the 20 yard line and the goal line. Offenses and defenses are routinely measured by their effectiveness in this area.

When applied to the retirement conundrum, the term “Red Zone” has come to mean that part of your investment life that begins 5 years prior to actual retirement and last until 5 years after your retirement date. Your performance when you are in this Red Zone will largely dictate the ability of your investment resources to carry you through your retirement in the lifestyle that you desire.

Approaching the Zone

Before you get to the Red Zone, your investments can be somewhat riskier and more highly leveraged because you still have time on your side. If the market slumps or you make an investment miscue, there remains adequate time to recover for the problem in time to be ready for entering the Red Zone! Typically, most of a person’s investment ‘nest egg’ is invested in higher performing stocks and mutual funds during this time.

Entering the Zone

As you enter the Red Zone, the whole paradigm shifts, all at once. You no longer have time on your side and must be much more conservative in your thinking and in your investing. Mistakes made and market slumps from this point forward cannot easily be recovered from and may, in fact, delay the date of your safe retirement. At this point the shift to more debt vehicles (bonds