Are You Looking for a Safe Retirement Investment Plan?

2 Investment Strategies for Retirement Header ImageOne of the most common questions that new retirees want us to answer is this:

How can I keep my money safe in retirement?

Unfortunately, there isn’t a simple answer – as an investor, for every benefit there’s a cost. Even cash isn’t a “safe” investment in the sense that it will always be there! After all, over time inflation will reduce your buying power.

That’s why it’s important to make note of the costs and benefits of every investment strategy you’re considering for retirement.

Your best solution will balance costs and benefits in a way that makes sense for you and your financial needs – that means it could very well be different than your neighbor’s plan.

Read on for some popular retirement investment strategies and their specific costs and benefits.

High equity allocation

In 1950, the average 65-year old man could expect to live just shy of 13 years. Today, he can expect another 18 years of life. For women, life expectancy at age 65 has risen from 15 more years to over 20. Keep in mind that this is an average: half of retirees will live longer.

Longevity has introduced a new and important risk for retirement planning: the chances of outliving your savings.

Allocating a significant portion of your retirement portfolio to equities (that is, north of 50%) can help boost your chances of long-term growth – thus helping to mitigate the risk of outliving your savings.

Key risks: High growth, of course, is a double-edged sword: a higher equity allocation can help your portfolio provide income for more years, but the exposure to market volatility can also deplete your portfolio during downturns. If you were relying on your falling portfolio to produce income, you could be in for a stressful time if the markets fail to cooperate.

With that in mind, a higher equity allocation is better suited for those looking for long-term growth and for those who can withstand a loss of capital and portfolio income during market drops.

When to reconsider: Reconsider a high equity allocation if you’re very reliant on your portfolio for steady annual income.

Making large withdrawals for income during market downturns can cause a double-impact on your long-term prospects: not only are you more likely to dip into principal during these times, you’d be losing the opportunity for the capital to recoup its losses over time.


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High bond allocation

For those who are looking to their life savings for long-term income, bonds are usually top of mind. Traditionally, a pre-retiree would begin shifting their holdings to bonds to reduce volatility and produce income.

Over the long-term, growth rates in bond portfolios tend to slow but steady, and with an ample portfolio bonds can produce a reliable source of income for your retirement needs.

Key risks: These days, a significant risk you face as a bond investor is low interest rates: bonds simply do not produce the same level of income that they used to.

If you have a large portfolio and don’t need to draw down more than 1% to 2%, this might not concern you very much. But if you were hoping to draw more income on a long-term basis, a bond-heavy portfolio could prove disappointing – or even dangerous. If you begin to take larger chunks of your principal, you increase your chances of outliving your savings.

Generally speaking, bond-heavy portfolios tend to be better suited for those who:

  • Have a very large capital base that doesn’t need to produce an enormous amount of income
  • Are very reliant on their portfolio for predictable income every year
  • Are very risk-averse when it comes to their savings

When to reconsider: If you’re counting on your savings to last a lifetime or if you have other income sources you could turn to in a market fall, you may want to reconsider allocating a significant portion of your portfolio to bonds.2 Investment Strategies for Retirement Info Image

Finally, keep in mind that there are different types of bonds. Investing in high-yield bonds may produce more income, but it also introduces different and greater risks to your portfolios. Speak with an advisor before pursuing a strategic bond allocation – it can get more complicated than you’d think!


There are several types of annuities for different needs and preferences, but the simplest is the immediate fixed life annuity. This is a contract between you and an insurer: for a lump sum payment today, the insurer will provide a guaranteed income for the rest of your life.

This, of course, is not an investment product: while you can personalize your annuity contract with “riders,” you won’t be making stock and bond decisions. The insurance company invests your assets in a pool and simply provides you with a check each month.

This can be a huge relief for those who are concerned about balancing income and growth, but it also has a cost.

Key risks: Unless you have specific terms in place to the contrary, if you die earlier than expected you will lose out on the capital that you place with the insurance company. You may also encounter higher fees depending on the complexity and specifics of your contract and the investments you’re comparing it to.

Generally speaking, annuities are better suited to retirees who strongly value guaranteed income as opposed to investment opportunities. They can also work well for those with risky portfolios outside of their retirement assets, for example for retirees who are relying on dividends from a private business venture.

When to reconsider: If you have health issues that make it unlikely you’ll meet the average life expectancy, or if you favor having control over your assets at all times, you might want to look at alternative strategies.

Remember, there is always an alternative

Keep in mind that investing during retirement can, in many ways, be far more complicated than investing to save for retirement.

Your potential needs in balancing growth with stability, income with returns, and of course the ever-present issue of taxes can make this a great time to speak with a financial advisor. A good one will help you strategize your portfolio to meet the needs of your life and with an understanding of your goals.

No matter what your preferences, concerns, or financial needs, there are many different ways to meet them. Whether it’s one of these three strategies, a combination, or another approach entirely, investing for retirement is undoubtedly a personal issue with many potential answers.

Don’t retire before you ask yourself these questions

Investment decisions are a critical part of retirement planning, but they aren’t the only thing you should be concerned about. Download our free guide to transitioning into retirement. Your Retirement Transition Plan covers all the major points you need to address before you take the leap, from health to housing, insurance to investment.


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Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

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Important Disclosures

& Associates Insurance Services or United Planners Financial Services (United Planners). The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
This page contains links to third-party company websites. By selecting a link, you will be leaving our website and launching a new browser window. These links are provided for informational purposes only and should not be viewed as an endorsement, sponsorship, solicitation or other affiliation with respect to any third parties. We are not making any recommendations or providing any advice on securities in particular or investments in general. Neither Vitucci & Associates nor United Planners Financial Services have reviewed the content of, and are not responsible for, the information or the results of the third-party websites.
Further Reading

Long-term stock and bond returns and volatility:

Longevity at age 65: