Investing as a Retiree - FAQ

So you've officially retired: congratulations! You've worked hard for a majority of your life to reach this point, and you're excited about what the future holds, and understand that continuing to invest after you retire is a sound financial decision. Please consult with your registered representative if you're considering making changes to your portfolio after retirement.

Why is investing as a retiree beneficial?

Investing throughout retirement can prove extremely beneficial to diversifying and making sure your nest egg lasts a lifetime. Even with years of financial planning and sound investment decisions behind you, it's hard not to worry whether you've saved enough. You never want to worry about cash running low or having to return to the workforce down the road. While there is always risk involved in investments, continuing to invest throughout retirement may increase your peace of mind to enjoy your retirement and focus on the most important things to you at this stage.

How do I find a balance between risk and security?

At this stage in your financial planning, building and preserving a conservative investment portfolio is crucial. For most retirees, focusing on more secure endeavors is often the plan. Talk to your financial advisor about your overall financial health, long term investment plans and your risk profile to decide where you should refocus some of your assets. An asset allocation plan will help you get a better understanding of where you should be diversifying your investments, what makes the most sense for your finances and life, and how you can create an investment strategy that will keep you comfortable though retirement. You can find a sample allocation chart for retirees here.

What are some of the most common investment strategies for retirement?

  • Fixed annuities (payouts of a fixed dollar amount over a period of time) can guarantee a portion of income during retirement and throughout the remainder of your life; however, individuals can be tied up for years with them.
  • Immediate annuities offer the option for you to pay throughout your retirement, or a single lump sum payment in exchange for a monthly income for the rest of your life.
  • Bonds can be sold at any time, but their value may vary depending on market conditions.
  • Balanced mutual funds can provide you with an array of stocks and bonds in one fund, for consistency and the opportunity for more long term gains.
  • Real Estate Investment Trusts (REITs) offer another option for diversifying your portfolio in retirement and can be sound income generators for you, though are not considered a conservative financial strategy as the market can be unpredictable.
  • Stocks that pay dividends are another retirement investment option that can benefit your cash flow, though this strategy is dependent upon the company's decision to maintain or cut the dividends, so it's important to diversify to keep your investment strategy healthy in retirement.

When contemplating your retirement investment options, it's important to consult with your independent financial advisor so you know and understand your options and the impact changes can have on your financial profile.

What considerations should be made for my withdrawal rate?

Running out of money in retirement is a top concern for most retirees. It's important that you work closely with your financial planner so that you don't withdraw more from your portfolio than you need. Talk to your advisor about the taxable accounts you have, the diversity of your portfolio and any minimum distribution rates when determining your withdrawal strategy.

Do you still have unanswered questions regarding investing as a retiree? If so, please don't hesitate to contact your financial representative. To learn about advisors in your area, please don't hesitate to contact SII.