4 Essential Tips to Ensure Your Portfolio Makes it Through Your Retirement


Shutterstock photo

For many Americans, $500,000 to $1 million is the goal quantity they would like to have in their portfolios at retirement.

Those who reach this goal (or even save more) doubtlessly have had to exercise self-discipline in the process. But in many ways retiring is like the proverbial letting of your hair down. It would stand to reason that one works hard in their younger years in order to be able to splurge and really live it up in their retirement years.

But nothing could be further from the truth. In retirement, you should follow certain tips in order to ensure that your portfolio lives as long as you do!

Tip 1 – Stay Invested

Generally speaking, retirement is not a signal to remove all of your money from your investment portfolio. On the contrary, the best advice is to keep your money in your investments and only withdraw it sparingly - in quantities which have been budgeted to cover your living expenses. Doing this will help your portfolio continue to earn interest in your golden years.

Tip 2 – Continue Investing

Many seniors will receive surplus monthly income in their retirement years as a result of multiple pensions or even taking a part time job for fun. In the case that you find yourself with additional disposable income, it can be tempting to give it away to help others or to use it to buy gifts for the grandkids.

A better way to use excess income would be to first update your budget and allow for any gift giving you desire, then invest the rest of the excess into your retirement fund. The reason for this is simple: today’s seniors are living longer than ever before. By continuing to invest your surplus income, you can help ensure that your retirement funds will never run out.

Besides, you can always leave surplus retirement funds to the needy in your will.

Tip 3 – Rebalance Your Investments

Though it is not a good idea to cash out your portfolio, it is a good idea to rebalance your portfolio to reflect the realities of your living situation.

For most retirees this means allocating the vast majority of funds to relatively safe investments and getting out of riskier investments. Though every retiree’s allocation strategy will be different, generally speaking, trying to take advantage of stock market upswings with your retirement portfolio is not recommended.

Tip 4 - Weigh Loved Ones’ Requests Carefully

Often a retiree’s loved ones run into tough economic times and then come to the retiree for help. Though there are many situations which are very serious (a life threatening illness for example) which may require tapping into your portfolio, the vast majority of requests will probably not rise to that level of seriousness.

When considering whether or not to help a loved one who essentially asks you to raid your portfolio, ask yourself a few questions first.

In the case of a loan, ask yourself if you can afford it if they never pay you back. Ask yourself just how serious the situation is. Ask yourself if you give in this time, how you will be able to say no to the next person, or the next situation.

Asking yourself these questions will help you evaluate how much you can part with to help (if any at all) or whether it would be prudent to help your loved ones exercise other options for financial assistance.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More from Joe Young



Joe Young

Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com