To that point, 30 years ago the retirement and bond market landscape looked quite different from the one we're currently experiencing. In 1988, the 10-year Treasury yielded between 8 percent and 9 percent, and the inflation rate was about 4 percent. Additionally, many people who retired in the 1980s had pensions that covered most of their living expenses so they could afford to take a conservative approach with their retirement portfolio. They could invest their portfolio in 10-year Treasurys, live on 4 percent of the bond income and still keep up with inflation, all while many had the security of multiple guaranteed income streams via Social Security and a pension.

High guaranteed incomes and a high-interest bond market are two comforts that today's retirees do not have. Here in 2018, pensions are disappearing at an alarming rate, the 10-year Treasury is yielding around just 3 percent, and inflation is about 2 percent. Safe to say, it is a very different environment. Yet despite these low rates, the "conventional wisdom" of overweighting bonds in a retirement portfolio has not changed.

Sticking with this outdated retirement strategy in such a low-rate environment all but requires retirees to invest in lower-quality, longer-term bonds to have any chance of providing the income and inflation protection they're seeking. I've observed this is increasingly the case.

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Unfortunately, this approach exposes their portfolio to additional credit and interest-rate risk while also increasing the correlation to their equity portfolio. The more your fixed income portfolio acts like equities, the more you are taking the exact risk (albeit a little less) that many retirees are trying to avoid without even realizing it.

As you've probably surmised, I believe many retirees are looking at bonds and their overall portfolios all wrong. I think bonds, especially in this interest rate environment, should be viewed solely as a safe harbor in the face of significant market declines rather than an income stream through all stock market environments. This being the case, I believe the use of high-quality, short-term bonds held in less quantity than conventionally discussed is a better overall approach to retirement income planning.

The goal of fixed income in a retirement portfolio shouldn't be total return, but stability and this is where many retirees are missing the boat. In retirement, when the market goes south, there needs to be a dependable asset class to provide the income needed. And generally, short-term high-quality bonds are more likely to provide that stability.