For Gen X investors, dotcom bubble haunts near-retirement portfolios

Key Points:

• Generation X faces a greater retirement crisis than baby boomers, with only 14% having traditional pensions compared to 56% of boomers, leaving many less financially prepared for retirement.
• Many Gen X investors nearing retirement are heavily invested in S&P 500 funds, which exposes them to significant sequence-of-returns risk if a market crash occurs just before or during retirement.
• Financial advisors recommend creating a diversified "retirement war chest" with cash, bonds, and short-term investments to cover several years of withdrawals, reducing the need to sell stocks during market downturns.
• Strategies like glide paths and bond tents, which gradually shift portfolios toward bonds before and after retirement, can help mitigate the impact of market volatility on retirement savings.
• The current S&P 500 is highly concentrated in a few tech stocks tied to AI, increasing risk; some advisors suggest diversifying away from these top holdings or using equal-weighted index funds to reduce concentration risk.