Three Steps for Investing Through Retirement

By Rich Topps

The Problem

Many people of pre-retirement age approach retirement saving as if; on the day they retire, they will cash out of all investments, put the money in a stack, and use it to live on for the rest of their lives.  Others fail to modify their earlier investment approach and unwittingly enter retirement with an unduly volatile portfolio.  Neither of these is a good idea!

In reality, retirement savings should remain invested throughout one’s lifetime and the investments should be structured to suit the retiree’s individual situation and comfort level.  Some people will need to draw substantially on their retirement accounts.  Others may need little or none of their savings to enjoy a comfortable post-retirement lifestyle.  And then, there’s everyone that falls in-between.

As retirement approaches, retirement savings investments should move from the accumulation phase to the anticipated utilization phase.  Each situation is different – there is no cookie-cutter approach that applies to all or most people. 

The solution

Step One – Get Help.  It’s a good idea to find and retain a competent and trustworthy investment professional during the retirement savings accumulation phase.  Share your goals and feelings about investment risk with that person, ensure that he or she provides reasonable returns within your investment comfort zone, and if necessary, is capable of modifying your investments to achieve your post-retirement goals and objectives.

Step Two – Change Focus.  Equally as important as all of the foregoing is a person’s comfort level with the types of investments that comprise his or her retirement account.  After all, those funds are supposed to also provide security and peace of mind.  If the retiree’s investments cause undue worry or loss of sleep, a change is probably in order – even if the change is not necessarily the best course of action from purely an investment standpoint.    

Step Three – Don’t Forget to Enjoy It.  Remember that the objective of saving for retirement is to help you be able to enjoy retirement.  Without professional guidance, people often fail to appropriately monitor their investments and/or they react emotionally or compulsively to headlines, rumors, and “gurus” in the media.  Such reactions frequently cause individual investors to do the wrong things at the wrong times.  However, with a competent investment professional handling your retirement savings, you’ll have one less thing to worry about and you can better enjoy your retirement years.