Don't let the rally in the stock and bond markets fool you.  Many Americans are still hurtling toward a retirement disaster.  Few realize it.  Even many of those running the big pension funds don't know.

That's the conclusion of John West and Rob Arnott at Research Affiliates, an investment management firm, in Newport Beach, Calif.  In their latest report, "Hope Is Not A Strategy," they have some numbers to back it up.

"I worry a lot about people reaching their golden years and discovering, 'Oh, I should've saved more,' and 'Oh, I don't qualify for Social Security anymore because it's means tested,'" says Mr. Arnott, a widely respected market strategist.  "We're headed for a retirement train wreck," he adds, "and it's going to get really ugly over the next 15 years."

Alarmist?  Perhaps.  But follow the math.

Have you ever spent an enjoyable afternoon watching your favorite football team build a solid points lead through three quarters only to see them change their previously effective offensive strategy to a protective "Prevent Defense"?  Usually, the opposition starts to come alive and the whole game changes. 

Personally, it drives me crazy - I usually sit there questioning the mental aptitude of the coach.  Why would he do this?  Why not keep running the same aggressive approach and blow the opposition away?

But this is the difference between professional coaching and armchair quarterbacking.  The coach's job is to win the game; he goes to prevent defense to dial down the offensive risk because it increases the probability of winning.  It increases the chances of winning by reducing the potential of quickly losing large chunks of their lead. It seeks to limit the downside.

The "Prevent" concept can apply to asset management wherein an investment professional may adjust a portfolio to reduce the risk of losses if the potential for reward doesn't justify the extra risk.  Just like football, asset management 'prevent' aims to minimize the downside at the cost of reducing the upside.