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

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.

If you need help choosing an asset allocation and portfolio composition appropriate for your age and risk tolerance, consider talking to a financial advisor.

Thinking about retirement means thinking in longer terms than most households are used to. Instead of planning for the next few months, it’s time to plan for the years and decades ahead. This means paying attention to long-term costs.

Among other things, you’ll want to anticipate inflation. Even at the Federal Reserve’s benchmark rate of 2%, inflation will double the cost of living every 35 years or so. these living costs Increases are one reason why you should plan for growth, not just safety, in your portfolio. Your money needs to keep pace with the rising costs of goods and services.

While you’re at it, don’t forget taxes. Unless you have assets in a Roth portfolio, you’ll pay income taxes on all your withdrawals. This is an easy asterisk to miss, so don’t forget that $100,000 in distributions will mean living on upwards of $70,000 to $80,000, depending on where you live. Depending on your tax situation and available cash, a Roth IRA Conversion could help you mitigate these taxes significantly.

Finally, there is the longest-term planning of all. You don’t necessarily have to start completing it real estate planning at 62, at least not beyond the basic tasks that all adults should have in their desk drawer. But, it is something to prepare for. Sooner than later, you’ll want to create a true estate plan, and as you structure your portfolio for growth and downsizing, be sure to anticipate it.

Your wallet is a source of income, but it’s also important to keep track of your expenses. So keep an eye on your household budget.

When you retire, plan your household budget. how much do you spend what do you need what do you want What lifestyle do you want to have? All of these issues will be important as you move into a more fixed income with fewer opportunities to give yourself a raise in the years to come. As noted above, this type of budgeting is also essential for portfolio management. You will need to know your needs to understand how you can invest around growth and security.

While doing so, don’t forget to anticipate new or growing cost areas, specifically health care. You may need additional insurance, including gap insurance or long-term care insuranceand this will add new monthly costs.

You may also have increased out-of-pocket health care costs. Hopefully, these expenses won’t set in right away, but you should budget for more medical expenses as the years go by. That money will have to come from somewhere, and the sooner you plan for it, the better you can afford it. A financial advisor can help you anticipate these expenses and make a plan to pay them.

A woman reviews her monthly finances using a budgeting app on her phone.

When you retire, it’s important to start planning how your expenses, budget, and investments will change. Calculate your spending and what kind of investment you need to meet this budget, because the end of work does not mean the end of managing your money. The answers will help inform how you structure your portfolio and allocate your assets.

A financial advisor can help you create a comprehensive retirement plan. Finding a financial advisor doesn’t have to be difficult. The free SmartAsset tool matches you with up to three verified financial advisors serving your area, and you can have a free introductory call with your matched advisor to decide which one you think is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.
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Keep an emergency fund on hand in case you have unexpected expenses. An emergency fund should be liquid, in an account that is not at risk of major fluctuations such as the stock market. The trade-off is that the value of liquid cash can be eroded by inflation. But a high interest account allows you to earn compound interest. Compare savings accounts from these banks.
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