Tips for Structuring your Retirement Portfolio

Anticipated withdraw rates, equities, age and life-expectancy combined can all be tips for structuring your retirement portfolio. One of the biggest problems today is people are living longer, and that means that their retirement funds have to stretch even further. The days of dumping equities at retirement are done, therefore, retirees need stocks, even if they pose a risk. Use these tips wisely for your retirement portfolio. 

Establish an estimated amount

You have to determine a goal, that will provide a tangible starting point. This estimate is how much money you will need to maintain your standard of living upon you retiring. According to the financial group ING’S, a 55 year old man who makes $100,000 a year, needs to have $1,257,193 at retirement age of 65, if he plans to live to the age of 85 to accomplish his goal of maintaining his standard of living. 

Hold sufficient cash reserve

You need to hold sufficient cash reserves. They may be money funds and CDs. This will help pay for those near term expenses. Use approximately 25 percent of this fixed income to buy high quality bonds, CDs, and low cost fixed annuities that pay out for a period of five to ten years. This is when retirees have the most expenses and become more active. 

Diversify holdings

You should diversify holdings that you do not need immediately. This strategy is common sense to meet the main objective of your retirement portfolio. It is good to preserve funds to last throughout your lifetime that do not impinge on the money you need for your current living expenses.

Recheck your portfolio

Constantly be watching and reviewing the mixture and ratios of your holdings. Because stocks can outperform bonds, ignoring your portfolio could be very irresponsible. If you never re-balance you could run into problems if some medical problems develop and need to adjust from your equities. It is better to know what is happening with your portfolio.

Get involved

Stay involved in your portfolio management. You should do this to reduce fees, or even to consider items such as index funds, which seek to spread risk through the grouping of stocks and bonds. You will have more time once you are retired to be actively involved and then you can make beneficial changes when necessary. If you find you are not happy with the stock portion of your portfolio, you may want to change the mix instead of reducing your stock ratio.

Keep track of withdrawal rates

It is very important that you keep track of the withdrawal rates. If you annually exceed your estimated yearly withdrawal rate, by even the smallest amount, your long term prospects can be severely damaged. You may have to go as far as adjust your overall goals if your estimates were unrealistic. 

Remember, it is always wise to establish the amount you will need to maintain your style of living when retiring. Seeing how much that actually is helps you plan better. Staying involved in your retirement portfolio helps you in the long run. Keep your retirement portfolio in the best shape, live longer and being prepared for your retirement is very beneficial.