Even if you’re an experienced investor with a retirement plan in place, it makes sense to go over the fundamentals from time to time to make sure you’re still in good shape.
Think of it like the beginning of baseball season, when even the most veteran players show up for training alongside the rookies. It never hurts to brush up on the basics, work out the kinks and learn some new strategies.
This is especially true if, like many people, your No. 1 concern is whether your money will last through a long retirement. You might need more than a pep talk from your financial professional. Some fresh coaching may be in order. It could include:
Taking a hard look at your lineup
A financial adviser can run your portfolio through several checks to test its resilience against various scenarios and identify any potential trouble spots. What if there’s a 30% drop in the market, or a certain sector takes a hit? What would that look like for you? How much money can you access quickly if an unexpected expense comes up? What kinds of fees are you paying on your holdings?
A stress test can analyze your asset mix and determine if it’s appropriate for your risk tolerance and goals. It can determine your liquidity. And it might help you find some solid but lower-cost investments for your lineup.
Building a strong defense
When you’re still working and earning a paycheck, the focus is usually on accumulation — hitting as many homeruns as possible — and that’s usually done with a portfolio that leans heavily on equities. But when you’re nearing retirement, protecting what you have becomes key. This typically means transitioning to a more conservative mix, and there are plenty of tools to choose from out there to do that, including bonds and annuities.
Maintaining an all-star offense
It ain’t over till it’s over. If you put all your money into protected, conservative investments, you could miss out on the growth you need to keep up with inflation and keep your income flowing in your later years. (Remember those double-digit CD yields your grandparents and great-grandparents counted on in the mid-’80s? With most CDs paying less than 2% APY these days, many savers now refer to them as “certificates of disappointment.”)
If you’ve had success with your buy-and-hold top performers, you may want to keep them on the roster. If not, your adviser can help you scout for stocks that offer both the potential for a reliable stream of income (dividend-payers with steady growth) and value stability.
Making the most of what your team has going for it
Don’t take a guaranteed income stream like Social Security or a workplace pension for granted. There are strategies that can help maximize these payments for you and your spouse. And don’t let the complexities of Medicare decisions keep you from selecting the plan that will best address your needs. Talk to a knowledgeable professional about the pros and cons of a Medicare Supplement insurance policy versus a Medicare Advantage plan and what to do about coverage if you’re still working when you turn 65.
Avoiding late-inning errors
Emotions — greed, fear, complacency — can cause investors to make mistakes. When the market is doing well, it can be tough to move to more conservative investments. When the market is doing poorly, it may be tempting to give up and sell everything just to stop the bleeding. Having the right plan in place can help tamp down both the gimme-gimmes and the jitters.
Adjusting for new rules
Even the best plans require some tinkering as times change. For years, retirees relied on the “4% rule” to determine how much to withdraw annually from a portfolio. Now, many advisers believe that guideline is outdated. The same goes for the old “three-legged stool” of retirement — Social Security, a pension and savings. Today, the future of Social Security appears shaky, and fewer and fewer companies are offering pensions to their workers.
New laws also make changes necessary. When the Bipartisan Budget Act of 2015 ended the “file and suspend” claiming strategy, many married couples had to find alternatives to maximize their Social Security benefits. This year, the new SECURE Act changed key rules related to withdrawing from, contributing to and inheriting money in tax-deferred retirement accounts. Be prepared to ask for help in updating your plan.
If it’s been awhile since you looked at your retirement plan — or if you’ve never gotten a comprehensive written plan — make it a priority. If you aren’t sure where you stand, or you’re worried about having enough money to retire, going for some updated financial advice could help you cover all your bases.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Paladin Retirement Advisors are not affiliated companies. Investing involves risk, including the potential loss of principal. Our firm is not affiliated with the US government or any governmental agency. The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way. 585040
Kim Franke-Folstad contributed to this article.
Jeff Beyer is the owner and CEO of Paladin Retirement Advisors (www.retirepaladin.com). His focus is on developing financial plans and retirement strategies that satisfy clients' life and investment needs. Jeff has passed the Series 6, 63 and 65 securities exams and is an Investment Adviser Representative. He also holds life, health and long-term care insurance licenses in Pennsylvania and New Jersey.
How to Buy Stocks
Not everyone knows how to buy stocks, even as investing in the stock market becomes more and more popular. This four-step plan can help.
By Will Ashworth Published
One Key Rule for Understanding 2023 RMDs
RMDs Required minimum distribution (RMD) rules can be confusing, but there is a guideline that can help.
By Kelley R. Taylor Published
Five Simple Year-End Tax Tips to Set Up a Successful 2024
If you wait until the new year, you may miss out on some valuable tax planning strategies. Here’s what you need to know before closing out 2023.
By Julie Virta, CFP®, CFA, CTFA Published
Six Estate Planning Tips for Younger Generations
Millennials and Gen Zers are taking their estate planning seriously. These tips can help make the process seem less daunting.
By David Weinstock, CFP®, AEP®, CPA Published
Year-End Tax Planning for a Financially Healthier Retirement
Getting your tax ducks in a row for the end of the year can decrease your tax liability and make the most of your income, now and in retirement.
By Ryan Marston, Investment Adviser Representative Published
Where to Start Financially After a Life-Changing Diagnosis
Dealing with an illness, yours or your child’s or that of another loved one, is hard enough without adding financial duress. Here are some considerations and suggestions for covering expenses.
By Stephen B. Dunbar III, JD, CLU Published
Six Ways to Prepare for Widowhood and Protect the Surviving Spouse
No one wants to have to plan for losing their spouse, but having plans in place and knowing what to do when the time comes can alleviate at least some of the stress.
By Tyler Hill, Investment Adviser Representative Published
Creating a Blended Family? Three Key Steps to Consider
Blended families can make your finances and estate extra complicated, but you can head off some of those issues with careful planning.
By Adam Frank Published
Do You Need Disability Insurance?
If you work for a living, the answer is yes, so don’t overlook protecting your biggest asset. Open enrollment season is the perfect time to assess your options.
By Frank J. Legan Published
Retirement Planning in a Time of Inflation and High Interest Rates
Today’s challenges make retirement planning even more complicated than usual, but it’s not all doom and gloom.
By Ken Moraif, MBA, CFP®, CRPC® Published