Living in a Two Percent World

Seniors scouting the Internet for safe, high-yield investments are finding that safety and high yield are rarely found together these days. "Once we looked for return on principle; now we hope for return of principle," says one 63-year-old who had hoped to retire last year, but who has extended his professional career to compensate for the 40% loss in his retirement portfolio. He is echoing the sentiments of many who watched helplessly as their nest eggs imploded.

A major change in seniors' investment philosophy has taken place in recent years. Once upon a time, investors facing retirement did not shrink from placing their money in aggressive equity funds with high yields. Now many are opting for safe havens that offer meager returns.

There was a time when returns of two or three percent were laughable, but today's focus on preservation of capital has pushed aside giddy scenarios in which 200% gains occurred in a matter of months, even weeks. Today's investors are settling for extremely modest returns in exchange for assurances of safety. Some prefer to keep their money in short term Cds or even money market funds.

Financial advisors who work with seniors generally applaud a return to choices that reveal a healthy aversion to risk. Conventional wisdom has always been that as retirement approaches, portfolios should be more heavily weighted in bonds and bond funds. Bonds, it is believed, are less risky and more liable to provide a sense of security.

Bonds have not been immune to downturns, however, and the bond funds that have prevailed have mostly been those with high-quality, government backed bonds. Consequently, seniors who only a few years ago were flying high with Lucent and Cisco are now pouring their funds into  . Treasuries.

Is there life beyond cash in the cookie jar? Can seniors move forward and still protect their nest eggs? Some experts counsel that moving ahead with a retirement plan is not only psychologically healthy, but financially healthy as well. In fact, say some, there is no time like the present to buy a retirement home.

Such advice may seem rash to those who watched their existing home values plummet, but seniors who are waiting for the price of their existing homes to return to early-21st century highs are making a mistake, advisors say. Communities for active adults are selling new homes at affordable prices that will not be seen when the housing market bounces back. Some adult communities, such as Virginia's popular, well-regarded Shenandoah, feature homes equipped with Universal Design, which allows graceful aging in place, assuring peace of mind now and in the future. Shenandoah stands out because its home builders are old hands at pricing homes at a level that makes sense in a down market.

Today as before, diversification means stocks, bonds, perhaps Cds and money market funds, but also home ownership. "Living well is the best revenge," wrote the seventeenth century poet George Herbert, and his words have meaning for those of us struggling through an economic maelstrom. A satisfying retirement that includes life in a beautiful new retirement community is the best revenge against the vicissitudes of an uncertain world. 



Robert L. is the creator and writer of a website created for those looking to learn more about retirement options in Virginia. To learn more about Virginia Retirement Community visit his site at   


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