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Investing After Retirement: Financial Strategies for Seniors

Finances | January 29, 2024

Two seniors talking with a financial advisor about investing after retirement.

Whether you’re nearing retirement age or have already settled into your ideal retirement lifestyle, you may start to wonder where to go from here financially. Many adults spend their working years saving and investing toward retirement but forget how important investing after retirement can be for continued financial freedom.

Properly managing your money and investments throughout your retirement is critical to ensuring that you fully enjoy your golden years without the burden of financial stress. This can be difficult for many seniors as they don’t know the best financial strategies for retirement investing.

To help, we put together a list of the most important strategies to consider when it comes to managing your money after you retire. 

Strategies for Retirement Income Investing 

Determine Your Budget

Creating a budget for monthly and annual expenses is essential to any retirement financial plan. While you may not need to match your take-home pay from before retirement, you should expect to budget anywhere from 50-80% of your previous income to cover your expenses. This number fluctuates based on lifestyle preferences, cost of living, and expected healthcare costs.

Before considering additional retirement income investing, you should ask yourself a few questions to determine what expenses you can expect during retirement:

  • Do you still have a mortgage or car payment?
  • Do you plan to travel in retirement? If so, how often and where to?
  • How will you pay for health insurance during any gap years?
  • Do you plan to move into a senior living community or assisted living facility?

You’ll need a good idea of how much you’ll spend in order to determine how much to withdraw annually and how much you can invest in future growth.

Develop a Balanced Portfolio

A significant challenge that retirees face is how to balance their need for their current expenses compared to their need for growth in future years. If you’re planning for a long-lasting retirement, you will need to be careful with how you manage your portfolio to reduce the risk of any financial-related stress down the line.

Many retirees look to maintain a high degree of safety in their investments so that they can generate enough income from a portion of their portfolio while the rest is able to grow. This is the balance that many hope to achieve for long-term financial success.

While this was easier to accomplish in years past when it was less difficult to allocate money from stocks and bonds to supplement your retirement income, it has, unfortunately, become a more challenging balancing act given today’s relatively low bond yields.

When it comes to building a balanced retirement portfolio, you will need to determine how much to allocate to bonds and how much to stocks. Previously, many investors would recommend the “Rule of 100” to help investors decide how aggressive your portfolio should be. This rule suggests subtracting your age from 100 to determine the optimal allocation of stocks and bonds. 

For example, if you are 60, the rule suggests you put 60% of your portfolio in bonds, while the other 40% is allocated to stocks. This rule has been amended in recent years due to low bond yield. Now, financial professionals would recommend the “Rule of 120” to ensure you are meeting your retirement financial goals. The “Rule of 120” works exactly like the “Rule of 100,” except instead of subtracting your age from 100 to determine the optimal allocation of stocks and bonds, you subtract your age by 120. This higher allocation would give you more growth over time, and given a long retirement, you’re more likely to need that extra growth.

Monitor Your Retirement Accounts

While many seniors have a percentage in mind to withdraw every year during their retirement, it’s recommended to monitor your retirement accounts annually to avoid outliving your assets. Depending on your health and age, your retirement could last 30 years or more. Due to the potential flexible nature of your portfolio, changes during that period may require you to make adjustments.

If your portfolio experiences sharper declines than expected or several years of weak performance, you may need to limit the amount you withdraw to provide for your long-term needs. This flexibility is crucial to the probability of your portfolio lasting through retirement.

Hold Cash Reserves for Emergencies

While finding the right investment opportunities is critical to avoid outliving your assets, you should also consider keeping cash on hand to cover your daily expenses as well as any unexpected expenses. By having cash on hand, you can be ready in case an emergency strikes where having liquid funds can help a great deal.

Additionally, retirees should still make sure their cash is working for them to guarantee some return on their investment. Rather than letting your cash sit in a checking account or traditional bank savings account where you earn very little interest, consider putting the money you need immediate access to in a money market account or a high-yield savings account. These accounts are the best of both worlds – giving you instant access to your money while also earning higher interest rates than traditional checking and saving accounts.

Regularly Review Your Estate Plan

You’ve worked hard for decades to secure your financial future, and you may now be considering what you can do to pass along something to the next generation after you are gone. It’s crucial to review your estate plan regularly to ensure it’s still aligned with your wishes and financial capabilities – especially if your retirement income investing has altered your financial capabilities. Items to consider in your estate planning include:

  • Your will
  • Applicable trusts
  • Beneficiary designations
  • Your financial and healthcare power of attorneys 

If you are unsure of how to proceed with an estate plan, consider working with an estate planning attorney to help you get your affairs in order. Estate planners work as a partner to meet your legacy planning goals – guiding you through the ins and outs to help make sure your wishes will be followed.

Consider Hiring a Financial Planner

Consulting with a financial expert can be helpful, especially if you are not certain about your current investment strategies. Consider collaborating with a certified financial planner or wealth manager to create a plan to accomplish your financial goals.

A financial advisor will work with you to create a personalized investment plan, chart your progress, and hopefully help you achieve your personal and financial goals.

Build Confidence in Your Retirement Plan

Having the ability to retire comfortably is a blessing that should be celebrated. But finding success in retirement depends on the investment decisions you make along the way. Finding the perfect budget balance and making smart, data-driven investments is key to building a secure retirement plan. By following these steps and the advice of a financial professional, you’ll be more likely to enjoy your later years to the fullest.

Financial investment strategies only play a part in making the most of your golden years. When you’re ready to take the next step toward a better retirement, National Church Residences is ready to help. We take an individual approach to senior care, offering quality senior living options and long-term care services for seniors to make the most of their golden years. Find out more or give us a call at 844-465-6063 to talk to one of our friendly team members today.

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