You’ve worked hard your whole like waiting for the day when you could retire – and finally that day has arrived! As with any big life change, you need to assess what you’ll need to live comfortably going forward, and you’ll need to carefully manage your assets so that whatever you’ve saved for retirement will last the rest of your life.
Conduct Regular Portfolio Reviews
Traditional practice tends to recommend that retirees focus on the safety of their principal above all else, which is why many people start shifting the majority of their retirement portfolio holdings into fixed income investments such as money market accounts and bonds. The problem with this approach is that retirees effectively lose their purchasing power if and when the return on the fixed-income investments doesn’t keep up with the pace of inflation. While it generally makes sense for your investment portfolio to become more conservative as you grow older, it’s smart to consider maintaining a least a portion in growth investments. Safe Harbor Financial conducts regular portfolio reviews for both pre-retirement clients and those already enjoying their retirements.
Spend Less and Spend More Carefully
You should never assume that you’ll be able to live on the earnings generated by your retirement accounts and investments for the rest of your life; at some point, you may need to draw against the principal. Be careful with spending too much too early into your retirement. It can be tempting – you’re enjoying a new freedom, seemingly without some of your old constraints, but living on a fixed income means you’ll need to prioritize what you can spend and when.