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Questions to Ask if You're Retiring Soon

June 01, 2020

As you go through life, the role of your investment portfolio changes. This is particularly true in retirement, when your portfolio transitions from a savings vehicle to a primary means of income. Here are some important questions you might want to consider if you're nearing retirement.

Should I consolidate my accounts?

Consolidating the accounts you hold at various firms or employers isn't something you necessarily have to do. But consolidating could give you a more comprehensive view of your assets, which may make executing your strategy easier, whether it's maintaining an appropriate asset allocation or having a strategic withdrawal strategy.

How should my retirement portfolio look?

As you approach retirement, your portfolio should shift to a more balanced mix of equities (stocks) and fixed income (bonds, CDs). We recommend having:

  • A year's worth of income in cash and short-term fixed-income investments – This helps insulate you from short-term market movements by helping ensure you have enough cash on hand for near-term living expenses.
  • 3-5 years of income in CDs and short-term fixed income – This helps ensure you have living expenses covered in the event of a more prolonged market downturn.
  • Stocks and growth investments – Most people plan on being in retirement for several decades. These investments help ensure your money lasts for as long as you need it.

How much should I withdraw from my portfolio?

The amount you withdraw each year is key to ensuring your money lasts. While no single strategy will work for everyone, we recommend someone in their mid-60s start with a withdrawal rate of 4%. This starting point may need to be adjusted based on your individual needs and circumstances. Starting with a conservative withdrawal rate gives you more flexibility over time and can help you to better weather market downturns and inflation.

Should I adjust my retirement budget?

Now is the time take a closer look at the expenses you have today that might go away when you're retired, like commuting costs or a house payment. Then, consider new expenses you might face, like healthcare costs and travel. Make sure the budget you built when planning for retirement realistically matches your retirement "paycheck."

Evaluating your portfolio and determining your asset allocation can be complicated, and very personal, so you'll want to discuss it with your financial advisor. If you're a few years or so from retirement, reach out today to discover the actions – if any – you may want to take.

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