Pre-Retirement Investment Planning
If the value of your investment portfolio increased 20% in any given year, you would likely be pleased. Similarly, if your portfolio value decreased by 20% you would not be so pleased. But, depending upon your age, such wide swings may concern you more or less.
If the value of your investment portfolio increased 20% in any given year, you would likely be pleased. Similarly, if your portfolio value decreased by 20% you would not be so pleased. But, depending upon your age, such wide swings may concern you more or less.
However, if you were age 70 and planning to leave your paying job forever to rely on your financial resources as retirement income, a dramatic change in the value of your portfolio would affect your investment goals for retirement and, therefore, would be immediately important to you.
It’s all about perspective. Your investment goals for retirement are affected by your age until retirement. That’s why it’s important to treat your investments differently when you’re 70 than when you’re 30. Different investment strategies for different ages.
Retirement Is Not The End
If you retire at age 70 and live another 25 years, you would not want all of your investments in too-conservative, short term positions.
Why? Because you would be forfeiting long term investment opportunities if you only invested for the short term. Those long term returns may help you keep ahead of inflation and help grow your wealth. More (long term) risk in exchange for potentially more return.
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Retirement: It’s All About Cash Flow
If retirement is about cash flow, then pre-retirement is when you need to start setting up your cash flow.
A financial advisor for retirement planning can help you select the strategy that works for you. Unlike your working years when you had a paycheck and didn’t need to use your retirement money as income, you may not have a paycheck in retirement. That means when the market drops, your available income drops, too. That can make you pretty conservative if you don’t have a strategy to manage your resources.
Connecting your pre-retirement investment planning to your retirement cash flow is part of this strategy: you’re setting up your investments to be there as cash income when you need them for income but also allowing your other investments to fluctuate when you won’t need them until years later.
A Financial Advisor and Your Retirement Planning
Your short term needs may be covered using short term strategies that are not affected by the market. A financial advisor for retirement planning would have recommendations how to accomplish that. That advisor could customize a strategy that included your Social Security and retirement planning (and other resources) in one overall strategy.
Weaving together a financial strategy that takes your risk tolerance, short term conservative investing, proper pre-retirement asset allocation, diversification, and estate planning considerations into account requires a financial advisor’s understanding of all of these options and the client’s needs and goals.
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Getting It Together
Pre-retirement is about preparation for retirement. It’s when you need to organize your resources, see what you have, how much more progress you need to make to reach your financial goals, and put some thoughtful plans in motion.
That takes planning and you may not even know where to start. A financial advisor for retirement planning does this every day for other clients. It may be your first time retiring but it’s not the first time your financial advisor has helped someone retire.
Why risk mistakes blazing a new DIY trail when there’s a well trodden trail for you to take?