I am nearing retirement at 62. How should I organize my portfolio right now?


A man nearing retirement reviews his investment portfolio.
A man nearing retirement reviews his investment portfolio.

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For many people, retiring is like crossing a goal. You’ve spent your working years building wealth, and now it’s time to manage and spend that money. In general, this is true: Your financial outlook will change significantly when you no longer have a normal stream of income. However, it is important to remember retirement it involves many of the same concerns and approaches you’ve always had with your money, from tax planning, household budgeting, and even inflation.

Asset allocation and portfolio composition remain as important in retirement as they were during the working years. And if you’re 62 and planning to retire soon, structuring your portfolio properly is paramount to ensuring your money lasts.

A financial advisor can help you build and manage your investment portfolio during retirement. Find and speak with a financial advisor today.

Retirees in the United States can expect an average life expectancy of 80 years. This depends on a number of factors, but ultimately, if you’re 62, you should expect to live another 20-25 years, and hopefully much longer.

This means you need to plan for the longevity and continued growth of the portfolio. One of the essential issues here will be finding a good balance between risk management and accumulation. You want to keep that money safe, but you don’t want it to spend the next 25 years languishing in a savings account, earning less interest than some investments can provide.

One approach, for example, is to divide your portfolio into sections or buckets based on your wants, needs and capacity for growth. Figure out the monthly budget you’ll need for necessities, then plan to generate that income through safe assets like bonds or annuities. Take another section of your portfolio and allocate it to your lifestyle — the money you want but could (literally) live without — and invest it in a more mixed collection of safe and growth assets.

Take the rest and put it into a more equity-focused long-term growth portfolio. This is your future money, the growth that will continue to build your wealth against future spending and inflation.

Whichever way you choose to structure your portfolio, the main issue is balancing your competing needs for safety and growth. Use safer assets to pay the bills and use more speculative assets to build ongoing wealth, because retirement isn’t the end of your money management. It’s just the next phase.



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