“If you’re close to retirement, don’t panic and listen to “trendy” financial advice. Remain calm, focusing on long-term goals, and partner with a fiduciary agent who has your best interests in mind.” Brian Swerdlow
By Brian Swerdlow
Most of us understand there is a tradeoff between risk and reward. You may realize, for example, that asset portfolios skewed more heavily toward stocks can deliver superior annual returns. However, the same stock-heavy portfolios will likely experience short-term losses that may cause an investor to panic.
Depending on your retirement timeline, a severe market upheaval can be devastating, and you might not have enough time to recover your losses. You will need adequate income when you stop working. Ask yourself, “Can I afford to lose even a single cent of my savings?
There is no “magic formula” for portfolio design.
Everyone wants and needs retirement income to maintain their lifestyles in retirement. But that doesn’t mean we don’t flinch when drawing out the money we’ve saved. Many seniors are terrified of having to take money out of their accounts. They may unnecessarily cut back on their lifestyles because they dread running out of cash before dying.
However, living your last few years stressed out and struggling because you overspent is not appealing either. There is no universal law governing portfolio design or process that works for everyone each time. That’s because we cannot know precisely how long we will live after retiring.
Still, you can and should take action to help ensure the likelihood of a successful retirement.
- You must understand your risk tolerance.
- You should realistically assess your future medical and long-term care needs.
- You need to understand the lifestyle you want to have in retirement.
- It’s a good idea to examine and potentially re-balance your current portfolio.
- It would help to clarify your money goals, including any legacy goals.
- It’s wise to investigate the best ways of creating moderate gains without taking too much risk.
- You’ll want to check out safe money products like annuities to generate an income stream you won’t outlive.
When you design your spend-down strategy and periodically re- balance your portfolio to achieve your goals, avoid the temptation to chase after high yields.
It’s best to have a long-term mindset regarding investing, especially as you grow older. There is no such thing as a reward without risk, but there are safer alternatives than investing in high-yield stocks and bonds. Adding safer assets to your portfolio may decrease the odds of outliving your savings.
Safe money products such as annuities and life insurance can help you create reliable, predictable income streams. Having at least one income stream to supplement your Social Security may make it more comfortable to take on riskier investments if you feel the need. Finding an advisor who understands the unique products and protocols necessary for a successful spend-down phase of life is a wise idea.
Federal employee? Click here to attend my special webinar designed to help you get the most from your benefits.
