Retirement Is No Reason for a Portfolio to Stop Working

No doubt you are aware that your future retirement income depends on the savings and contributions you made during your working years. But it may surprise you to learn that the investment returns produced over time by your retirement portfolio will play an even larger role in funding your retirement.

New research has revealed that nearly 90% of retirement income results from investment returns that are generated after the funds are socked away.¹ Knowing this certainly doesn’t lessen the importance of saving and investing for retirement, but it highlights the need to remain diligent when it comes to managing and monitoring your investments during the retirement years.

Allocate Assets Wisely

An appropriate asset allocation strategy enables you to strive for portfolio growth while also working to help preserve principal and avoid damaging losses. Investments should be allocated among the appropriate mix of asset classes (stocks, bonds, and cash equivalents) depending on your tolerance for risk and other personal factors. Experts also recommend diversifying within each asset class to further help manage risk. Asset allocation and diversification do not guarantee against loss; they are methods used to help manage investment risk.

Revisit and Rebalance

Review your asset allocation periodically and consider how new financial needs should be addressed. Over time, your established asset allocation will be thrown out of whack as some market segments outperform others. Rebalancing your portfolio may lead to a more consistent return.

Obviously, retirement is no time for your portfolio to rest on its laurels. Call us to schedule a review of your investment strategy. Together we can address ways to help your portfolio work harder so you can pursue a more secure retirement.

1) Journal of Financial Planning, September 2008