Retiring from your job can be a liberating experience, yet it can also leave you feeling overwhelmed with financial decisions. With the extra free time that comes with retiring, many individuals seek to use their new days to meet other goals on top of retirement planning. Before hitting the gas pedal and charging toward those goals, however, it is important to understand efficient frontiers for spending in order to achieve all these objectives in a financially sound manner. In this blog post, Goldstone Financial Group shares strategies for efficiently managing finances between retirement savings and reaching other life goals – so that readers have the peace of mind of knowing they are making informed choices along their journey of financial security!
Goldstone Financial Group Lists Efficient Frontiers For Other Retirement Spending Goals
When deciding how to allocate their retirement assets, retirees should consider a number of factors, says Goldstone Financial Group. First and foremost is the purpose of the retirement portfolio: what do you want it to accomplish? This could include anything from providing an income stream for day-to-day living expenses to accumulating wealth for passing on to heirs or leaving a lasting legacy. Knowing your goals can help guide decisions about asset allocation, and which types of investments may be most suitable for achieving those goals.
Stocks have historically been one of the most popular asset classes for retirement portfolios due to their potential for long-term growth. Generally speaking, stocks are viewed as riskier because they tend to fluctuate more in price than other asset classes like bonds and cash equivalents, but they can also provide higher returns over the long run. Retirees should consider their risk tolerance and time horizon when deciding how much of their portfolio to allocate to stocks.
Bonds are typically viewed as a more conservative asset class than stocks since they have lower expected returns but also lower volatility. They can be used as part of a retirement portfolio both to generate income and to reduce overall portfolio risk by providing diversification away from stocks. Fixed bonds, such as those issued by governments or corporations, may offer a predictable stream of cash payments, while floating-rate bonds may provide higher potential yields if interest rates rise in the future.
Inflation-adjusted SPIAs (single premium immediate annuities) and fixed SPIAs can be used to provide a guaranteed lifetime income stream. These investments involve giving up control of the capital in exchange for a regular, reliable stream of payments that are often adjusted for inflation over time. This can be beneficial for retirees looking to generate a dependable source of income to cover living expenses and reduce the risk of outliving their savings.
VA/GLWBs (variable annuities with guaranteed lifetime withdrawal benefits) offer another way to generate an income stream while still maintaining some control over retirement assets. With these investments, customers purchase contracts that include features like minimum guarantees on withdrawals and death benefits if they pass away before their retirement funds have been completely depleted. While these products can help protect against longevity risk, it is important to understand the fees and other considerations that go along with them.
According to Goldstone Financial Group, retirees should also be aware of the tax implications associated with different asset classes. For example, investments like stocks, bonds, and mutual funds are typically subject to capital gains taxes when they are sold at a profit, while fixed SPIAs and inflation-adjusted SPIAs may offer tax deferral or other benefits. It is important to consider any potential tax implications when deciding how to allocate retirement assets.
Goldstone Financial Group’s Concluding Thoughts
Ultimately, there is no one-size-fits-all approach for retirees looking to choose how to allocate their retirement assets. Depending on individual goals and risk tolerance, it may make sense to invest in a mix of stocks, bonds, inflation-adjusted SPIAs, fixed SPIAs, and VA/GLWBs, as per Goldstone Financial Group. A financial advisor can help assess individual needs and develop a retirement portfolio that best meets those objectives.