How Jack Bogle’s Investing Approach Can Help If Retirement Is Getting Close

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You do not need to pore over earnings reports and analyst forecasts to build a successful portfolio. In many cases, the simplest path is the one that best supports your long-term financial goals.

Vanguard founder Jack Bogle helped popularize low-cost investing, paving the way for cheaper mutual funds and exchange-traded funds, or ETFs. If you are in your 50s and approaching retirement, you may be thinking about how to adjust your portfolio to match your risk tolerance, time frame and goals. Bogle’s low-cost approach can make that process easier to manage.

The long-term benefit of lower fees

Choosing low-cost index funds instead of funds with much higher expense ratios may not change results right away, but it can create meaningful savings over time. Many ETFs that track the S&P 500 and other major benchmarks charge less than 0.10% in annual fees, while funds with 1% expense ratios are far more expensive by comparison.

For example, an investor with $500,000 in a portfolio tied to funds charging a 1% expense ratio would pay $5,000 in annual fees. The same amount invested in funds with a 0.25% expense ratio would cost only $1,250.

Why a simpler portfolio can lower risk later in life

Bogle’s method favors a small number of broad index funds held for the long term. That approach helps reduce reliance on any one stock or sector. The portfolio can still participate in market gains, while losses may be less severe during downturns and corrections.

Regularly buying index funds through dollar-cost averaging and holding them for years can also help keep emotions out of investment decisions.

Applying the approach in your 50s

Using Bogle’s philosophy in your 50s may not require major changes. Start by reviewing which funds you own and how much you are paying in fees. If your portfolio lacks diversification across stocks and bonds, U.S. and international holdings, or companies of different sizes and sectors, consider funds that broaden your exposure. If your costs are higher than you are comfortable with, you can move out of expensive funds and into lower-cost alternatives.

As retirement draws closer, it may also make sense to maximize tax-advantaged retirement accounts. Roth accounts can protect withdrawals from taxes, while traditional retirement plans allow for tax-deferred contributions.

It is also worth considering your current tax situation and the bracket you may fall into later when deciding which account type to use. Tax diversification can further help manage risk and expenses in retirement. Many investors spread their money across workplace plans such as 401(k)s, IRAs and taxable brokerage accounts.