By Paul S. McNulty, CFP®
Hearing the word “retirement” can conjure up many emotions: excitement, joy, and even anxiety or nervousness. Retirement is an amazing accomplishment, but making sure you’re ready for it can be overwhelming, especially if you look at all the unknowns. Thankfully, there are ways to plan for many of the risks and headaches that retirement brings. Let’s look at some retirement planning challenges so you can feel empowered to prevent or work through them.
The Asset Allocation Question
At retirement, the last thing you want to experience is losing a large portion of your investments due to a misallocated portfolio. It’s important to make sure your assets are handled carefully to make sure you have money for the long haul.
That’s why it’s crucial for your money to be allocated based on your age, time horizon, and personal risk tolerance. Someone who is 20 years away from retirement and okay with losing 15% of their money is going to have a portfolio that looks very different from someone who is retiring in 5 years and isn’t willing to lose more than 8% of their savings. A financial professional can walk you through the process of determining exactly what level of risk you want to take and can afford to take and help you design a portfolio customized to your needs.
The Reality Of Inflation
Inflation is a reality; not planning for inflation is the risk. Social Security factors in inflation through the Cost of Living Adjustment (COLA) and will adjust based on your working years, but how can you protect your other assets? There are many ways to reduce the risk of inflation, such as diversifying your assets and creating an inflation buffer in your portfolio or making a withdrawal plan that accounts for inflation surges in the future.
Outliving Your Savings
Perhaps one of the most overlooked items in a retirement plan is your income plan, or lack thereof. We work so hard to get to retirement that we forget to make a plan for how to handle our money after. When you retire, you want to stay that way, and you do that by creating a reliable income stream that will last the duration of your retirement so that you can maintain your desired lifestyle for the rest of your life.
Don’t Let These Risks Get You Down
Retirement is an incredible time of life, one that you’ve worked hard for and deserve. That’s why it’s so important to do more than just save and invest; you need to look at the big picture and prepare for the many variables that could come up. If that sounds overwhelming, don’t fear! That’s what we do best at Boston Metro Advisor.
If you are looking for effective strategies for the financial challenges you face in your everyday life, we’d love to walk with you and help you take care of the intricacies of retirement planning. Contact us for a complimentary consultation by calling (781) 995-0253 or email me directly at firstname.lastname@example.org today!
Paul McNulty is the founder of Boston Metro Advisor with over 20 years of experience helping people navigate the ups and downs of the economy toward the financial future they envision. His education consists of a Bachelor of Science in business administration from the University of Rhode Island and the CERTIFIED FINANCIAL PLANNER™ (CFP®) professional designation.
Paul’s experience and education have made him a multi-faceted professional capable of assisting people with virtually all their financial needs. His services include every facet of retirement planning, from 401(k) rollover services and income planning to wealth management and estate planning. Paul has been active in his community over the years as a youth sports coach. When he’s not spending time with his wife, Cindy, and their two children, who are both recent college graduates, Paul enjoys reading, playing golf, and fishing. Learn more about Paul by connecting with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Asset Allocation does not ensure a profit or protect against a loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.
No strategy assures success or protects against loss.