By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management Advisor^SM
Accredited Investment Fiduciary®

Some realities of retirement planning have changed in ways that are difficult for many people to wrap their minds around.  Dogma has been that the closer you are to retirement, the more conservative your money should be invested.  “You’re right, but not quite” has become one of my favorite recent sayings:  it could be my next blog theme!

A stock-to-bond ratio is how most people gauge their measure of aggressive to conservative, shifting to bonds as they approach retirement.  I had a gentleman come to me who wanted a specified income from his portfolio while investing all conservatively in either bonds or CD’s.  The problem is, he wasn’t really aware how far interest rates had come down.  For example(1), on 04/16/1990, a ten year treasury was yielding 8.69%.  Ten years later, the rate was 6.01%.  On 04/16/2010 the yield was 3.2% and on 04/15/2020, the yield was 0.63%!  Unfortunately, with the size of his portfolio, as with most, this just wasn’t realistic with today’s rates.  Fortunately, there are other options to consider besides a bond or CD allocation which provide income.

Longevity is also a significant consideration.  In retirement, you may likely have 20 or more years to both use your money and make your money last.  For many people, this justifies keeping their money working by investing at least a portion of their portfolio into longer-term investments.  The investments may be  different than they were in a 401(k) or other pre-retirement account purposed for accumulation, but it is important to understand that parking money too conservatively for too long may pose a risk in terms of falling short later on down the road.  You can be retired from working hard, but your accounts don’t have to be.

1. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=1990

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or louann.schulfer@lpl.com.  www.SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.