Speak to a Licensed Sales Agent/Producer 1-888-250-3820 |
TTY: 1-877-486-2048 | Hours: 8am-6pm CST M-F, 9am-1pm CST Saturday
Start here! Tell us your zip code and we’ll find plans in your area:

How seniors can approach investing

Finance & Planning | Sep 09, 2016



Once you've hit retirement, life is supposed to get a bit easier.

You no longer have to wake up early to beat the traffic in order to get to the office, nor do you have to worry about picking up your kids from soccer practice.

Even so, your responsibilities don't disappear during retirement, particularly when it comes to your investments.

Throughout your working career you most likely saved as much money as possible in order to build a retirement nest egg. Generally speaking, younger individuals should follow more aggressive investment plans that target bigger returns, while older individuals may abide by a more conservative approach. Whether you have a 401(k), Individual Retirement Account or both, your money still needs to be managed to ensure it will last.

But your strategies in retirement differ from those of someone younger who will still be working for another 20 or so years.

What is my strategy?

First, you need to realize that the monthly paychecks are a thing of the past, up until you can start collecting Social Security. But it's very difficult to live off only that source of income, which is why you still need to carefully invest your money.

The good news is that if you've had retirement portfolios for years now, you probably won't have to drastically change your setup, as Kiplinger pointed out. When it comes to investing, you need to consider all possible outcomes.

"When it comes to investing, you need to consider all possible outcomes."

For example, ask yourself how your portfolio will be affected if you withdraw a certain percentage every year and how long your assets will last. When deciding what course to follow, you have to ensure your investment portfolio will meet your expectations with regards to growth, income and safety.

While retirement is a time for relaxation, you still have to make sure you can afford living costs and other expenses that will pop up.

Two strategies in particular can help you meet your investment goals while in retirement.

The bucket approach

Under the bucket strategy, your money is divided in three different points of retirement:

  • Early
  • Middle
  • Late

According to Morningstar, this approach will meet your needs for money during retirement while also maintaining a diversified portfolio. For instance, in the first bucket is your immediate living expenses, while the other buckets are set aside so your assets can produce higher returns as the years go by in retirement.

Cover the basics

Under an approach that covers the basics, your setup will differ. With this strategy, you calculate your fixed expenses with the appropriate fixed income. Your fixed income also takes into account any Social Security payments, pensions and more.

The rest of your investment assets are then left for expenses that are not considered fixed. Vacation trips, money for a smaller home or anything else that can be considered a non-necessity can be covered with money drawn from your investments.

"You'll still need to manage your investments to help cover life's expenses."

Which is right for me?

Ultimately, the choice over which investment strategy to follow during retirement is up to you. You may find it worthwhile to meet with a professional financial service to discuss your needs and goals throughout retirement.

If you've been actively saving and investing money throughout your entire adult life, your retirement fund should be large enough to last through the years. But you'll still need to manage your investments to help cover life's expenses and the possibility of leaving some behind for your family.

Above all, your investments can help you enjoy a more comfortable retirement, one that doesn't include money worries.