Making Your Retirement Assets Last

In the Wall Street Journal  

It’s a retiree’s nightmare: outliving the assets in a retirement portfolio.

Between historically low interest rates dragging on fixed-income yields and uncertainties about taxes, not to mention the threat of future inflation and volatile markets that send skittish investors seeking shelter, retirees who are living longer are finding it challenging to keep their portfolios up to speed.

Retirees need an efficient plan of attack to squeeze all the juice out of their portfolios, ensuring they have sufficient assets for their golden years. Here are some strategies:

  • Map out a budget for necessities—include everything from housing to food, transportation, health expenses and utility bills—and set aside a chunk of a portfolio for these costs.
  • Put some money aside to cover your expenses for anywhere from one to three years so you don’t have to sell at a market bottom.
  • Watch out for longevity risk.  This could include long-term care or annuities.
  • Don’t be too conservative—bonds aren’t always your friends.  Bonds can drop in value if interest rates rise.
  • Don’t forget about inflation.  It’s called a “silent killer.”
  • Use asset allocation and alternatives to help manage volatility.  We have discussed this in a precious post.
  • Limit the tax man’s bite.

Thanks to modern medicine people are living longer than ever and the fear of outliving retirement assets is becoming widespread.  Combined with inadequate savings, longevity means that getting professional investment advice is becoming increasingly important.

 

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