How Retirement Planning Changes as You Age

For many young working adults, retirement is a distant dream. They must contend with competing financial interests that might take precedence over saving for something many decades away. Paying off student loans, buying their first house, buying a car, starting a family, taking care of aging parents. Of those priorities, the methods recommended for young people who want to start saving for retirement are relatively simple: maximize return for some unit of risk.1 This might just look like a generalized 100% equity portfolio that benefits from being held for a longer period of time.

Yet as we age, our financial priorities change and saving for retirement becomes more complicated. Once retirement finally arrives, a whole host of new considerations take over. Inflation and the risk of outliving one’s savings (or, longevity risk)1 become important factors in someone’s financial planning. Some experts1 recommend a more personalized financial plan as we age into retirement because everyone’s situation is unique.

Every retiree has different goals, income streams, savings, risk tolerance, life expectancy, and anticipated lifestyle. But many retirees need to be generating some kind of income. 92% of retirees age 65 and older use Social Security as at least one source of income.2 25% have some form of wage, salary, or self-employment income.2

Nearly half of all retirees gain at least some income from property, interest, and dividends.2 Dividends can be a powerful source of income for retirees and may be less volatile than non-dividend equity exposure. The TrueShares Active Yield ETF (ERNZ) focuses solely on managing dividend yield to seek consistent income for investors. It aims to provide that income regardless of broader moves in the market, thereby reducing a potentially impactful risk for investors who have reached the drawdown stage.

Another strategy for reducing risk during retirement is to diversify one’s assets. Expert analysis1 revealed that for an optimal portfolio, defined as building the largest nest egg, generating the most retirement income, and having the highest probability of not outliving your assets, investors should consider investing two-thirds of their portfolio in international stocks and one-third in domestic stocks.

While many advisors discourage retirees from investing 100% of their assets in stocks except in rare circumstances, ERNZ can be added to a more diverse portfolio as another potential source of income for retirees. The fund contains a mix of domestic and international stocks as well as a broad diversity of asset classes. Holdings include common stocks, ETFs, real estate investment trusts (REITs), closed-end funds, royalty trusts, depository receipts, and others.

Regardless of the stage an investor is in toward saving for retirement, it is important to remember the words of Douglas Boneparth from Yahoo Finance’s Decoding Retirement:1

“Money is a game you play your whole life. It’s constantly evolving and changing.”

Your retirement portfolio should change and evolve alongside you.

https://finance.yahoo.com/news/why-retirement-portfolio-strategies-get-more-complicated-over-time-212840564.html

https://www.ml.com/articles/planning-for-stages-of-retirement.html

ERNZ

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