When it comes to retirement planning, there are only two outcomes. You will either outlive your savings or your savings will outlive you. It’s that simple. Unfortunately, it’s not easy. Below are a few strategies to consider during your transition years.
50s and 60s: Plan for the Future
Around age 50, investors should begin to plan more specifically for their retirement. It’s important for investors to remember that even though they are approaching retirement, they should still maintain a strong holding of stocks. An investor will retire and may not touch some of their assets for a few decades. Those funds should be invested a little more aggressively than the funds they will need early in retirement.
Retirement Transition: Writing the Next Chapter
As an investor enters retirement, they transition from acquiring assets and saving to spending. The asset allocation should not have a sudden change. Rather, a phased approach can offer a smooth transition into retirement. We work with clients to solve this dilemma by using a bucketing strategy. In a sense, investors split their portfolio in four buckets, with each bucket designed to provide income for 7 to 8 years at a time, and focused on using an appropriate asset allocation for each bucket based on the timeframe.
Age 70+: Staying Prepared
It used to be that the average American male had reached his life expectancy by age 65. In fact, when Social Security first started, it was designed to help people that had lived longer than the life expectancy at the time (age 65). Now, with changing retirement trends, many people are still working at age 70 and beyond. Not to mention living longer… a lot longer.
If an investor is healthy and there is longevity in the family history, it’s important to review the portfolio to make sure it is not being depleted early. If the investor is unhealthy, or does not expect to live much longer, it’s important to check that beneficiaries are up to date or develop a strategy for gifting the account to a loved one.
