Investors building a retirement portfolio assume that bond funds behave like bonds, but most bond funds do not. They lose value when interest rates rise, they don't have maturity dates, and there's no time at which you can cash in the fund for its par value. Most bond funds perform more like low-volatility low-return stock funds than individual bonds. However, there's a relatively new type of bond fund that offers performance similar to actual bonds, and these fill a longstanding gap in retirement investment planning.

Steve McConnell, CFP^®

Sequence of returns refers to the risk that an extended down cycle begins at the onset of retirement. The risk that a down cycle will permanently impair your retirement portfolio is real. Conventional wisdom treats this as an asset allocation problem, but the typical response of moving heavily into bonds (or bond funds) as you approach retirement can make the problem worse. A better solution makes targeted use of a specific type of bond fund.

Steve McConnell, CFP^®

The 4% rule is both one of the most cited numbers in retirement planning and one of the least useful. The rule makes questionable assumptions about investments, spending patterns, future income, future assets, and life expectancy. It turns out, when all factors are considered, the 4% rule isn't even a good first order approximation.

Steve McConnell, CFP^®