Portfolios are typically constructed based on an individual’s investment goals, risk tolerance, and time horizon. By following these guidelines and using various optimization strategies, investors can build a diversified portfolio that is appropriately positioned to pursue their long-term goals.1
However, as a retiree, your lifestyle choices might influence how you decide to structure your investment strategy. Here are a few things to consider when evaluating your portfolio:
Do You Intend to Travel?
If you are considering extended travel that may keep you disconnected from current events, investing in a portfolio of individual securities that requires consistent attention may not be an ideal approach. Consider consulting with an advisor who can help manage your retirement savings while you are away, allowing you to focus on enjoying your travels.2
Are You Starting a Business?
Using retirement funds to start a business carries significant risk; but if you choose this path, you may want to reduce the risk level of your investment portfolio to help compensate for the increased risk you assume with a new business venture.
Since a new business is unlikely to generate income right away, consider adjusting your portfolio with an income orientation to provide you with current income until the business can begin turning a profit.
Is Your Income Strategy Sufficient?
Market volatility can undermine your retirement-income strategy. While it may come at the expense of some opportunity cost, there are products and strategies that can help protect you from having to draw down your savings if the value of your portfolio ever dips—a major cause of failed income approaches.
For more information on calculating your retirement expenses, identifying potential income sources, and optimizing your savings and investment strategies, I encourage you to download our retirement income guide here.
Conclusion
Whether your ideal retirement involves globe-trotting, a new entrepreneurial endeavor, or simply maintaining a comfortable income, aligning your investment portfolio with your lifestyle is key.
If your goals or circumstances have changed in retirement or you would like to revisit your current strategy, please don’t hesitate to reach out.
1Diversification and portfolio optimization calculations are approaches to help manage investment risk. They do not eliminate the risk of loss if security prices decline.
2Keep in mind that the return and principal value of security prices will fluctuate as market conditions change. And securities, when sold, may be worth more or less than their original cost. Past performance does not guarantee future results. Individuals cannot invest directly in an index.