It is common knowledge that most Americans have a big gap between what say what they want and what they do to get there. This is also true of 'baby boomers (those of us born like me between 1946-1964) in particular.
Blackrock a popular financial management firm reported results of their survey of 30,000 people worldwide (including 4,213 Americans)showing most Americans are holding twice as much cash as they should while planning for retirement. Yet, 3/4 still maintained they are well on their way to security in retirement.
Retiring Baby Boomers claim they will have an average of $45,000 in annual income in retirement but their portfolios reveal they will only have $9129 annually, a staggering gap of $36,371! Worse even the really wealthy, those with over $250,000 income annually in retirement, were short of their own assessment of what they intended to spend in retirement. Now, add the fact that interest rates are close to zero and if this persists and one has a large amount in cash/bonds, what does that do to future plans?
Everyone recommends having savings in cash or other liquid instruments to support living for 3-12 months depending on who you listen to. So, beyond this, it must be that baby boomers are scared of the recent market swings and do not what to invest in the equity market and some have 70% or more sitting in cash.
Question is: Does one continue to lose to inflation specially if the quantitative easing continues, interest rates at < 1-2% or dip your toe in equities? No one has the right answer of course. Even experienced investors abandon their asset allocation models ( ratio of equities to bonds to cash) when they are spooked and then jump back in the market at the worst possible time. That is why a lot of individual investors holding stocks and mutual funds do much worse than the average return on the same stocks/funds that are held without selling.
All I can say is stick with your asset allocation model with minor tweaking as you age and don't take jerky, emotional steps. If you need a tranquilizer every now and then, call your doctor!!