FOCUS ON INVESTING: Retirement Income

During your portfolio-building years, you are likely to have a bias to equities. With a long time horizon and regular additions of capital, you have an opportunity to maximize growth potential.

As you get closer to retirement, however, it’s natural to begin tilting your portfolio away from equities and towards fixed income. Not only will you be setting up an income stream, you’ll enjoy more stable returns and gain protection from the impact of a market downturn.

The hesitation factor

It’s not uncommon, however, for some investors to feel uneasy. They fear that paring back equities will reduce their growth potential, possibly to the point where they’ll need to draw down principal. So what’s the right amount of risk to take off the table?

Let’s run the numbers. How would 3%, 4% or 5% returns affect the amount of money you have available throughout your retirement? If you need 5% returns to sustain your lifestyle, we can structure your portfolio to achieve them. If it turns out 3% returns are sufficient, why take on more risk than necessary?

The gradual approach

Any adjustments to your portfolio don’t have to (and shouldn’t) happen all at once, of course. By gradually reducing risk, we can allow a portion of your investments to continue to benefit from stronger growth potential.

Let’s start building risk reduction into your plan. Schedule a retirement income checkup with us to do the math, making sure you’re exposed to the minimum amount of risk needed to reach your goals.