A challenge I’ve seen people face is figuring out how to begin transitioning their finances for retirement. This may be especially difficult for some people because of the stock market’s upward momentum. It’s hard to know when enough is enough or how to scale back your portfolio risk level when times are good in the market.
As bonds have increasingly paid less and less, this becomes even more problematic because we’re seeing portfolios completely constructed with equities. What that means is when a market correction happens, you may be impacted. What will that mean for your retirement aspirations?
The ten years before you are retiring and really the five years before you are planning to retire are important. I frequently talk to people who explain to me that they never fully recovered from the 2002 or 2008 crash due to when they retired or when they got out of the market. The decade before and after retirement are important
There are ways to be invested in the stock market without being overexposed to gyrations or corrections that may devastating in a retiree’s portfolio.
Also, there are substitutes for the bond portion of your portfolio. The 60% equities and 40% bonds rule from the 1990s is broken. There are innovative techniques to remedy being overexposed in the market.
If you’d like to learn more about what tool we use for the bond portion of portfolios email us at Connect@ClientsExcel.com or call our office at 864.641.7955 and we'll send you a complimentary bond alternative report.
If retirement is on your horizon in the next 5 to 10 years, I highly recommend you meet with a financial planner. Here’s a list of questions I’d ask the financial planner.
1. How much of my current income will I be able to replace with my pension, Social Security, and retirement savings?
2. When should I start Social Security?
3. How do I figure out where I should pull money from first?
4. What is a sustainable withdraw rate?
5. Are there any assurances that I won’t run out of money?
This quick list should allow you to understand a financial planner’s investing philosophy and help you better understand if it resonates with what you are looking for in a planner. As always, thank you for reading and feel free to reach out by email or phone with questions or comments.
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