Close to Retirement? Advice Varies on What to Do


There is no one-size-fits-all when it comes to late-stage retirement planning, and this became very clear in a recent US News article by Philip Moeller where several planners, advisers, and wealth managers each gave their two cents on boosting wealth in retirement.

Joy Slabaugh, a financial planner with EST Financial Group in Delmar, suggested an annuity approach and preservation mode. If you have amassed enough to draw a maximum of 4% of your portfolio in retirement even without any future growth, that’s excellent advice. It should be noted however that Slabaugh recommended non-traded REIT:s and investing in those is considered fairly high risk – not exactly preservation mode in my book.

Tom Brown, who is associated with Northwestern Mutual, recommended an approach where the portfolio will be re-balanced frequently to stay in line with the retirees budget. To put it simply, make a budget and then invest based on your portfolios need to cover that budget. Want lower risk? Then you might have to cut your budget. Before you decide to go down this route of frequent re-balancing, check up on the costs associated with this strategy because they can be quite hefty and may force you to take on more risk than you’re comfortable with in the pursuit of covering both your budget and the re-balancing costs.

As Erika Safran of Safran Wealth Advisors accurately points out, the peace of mind that comes with low-risk investing isn’t free. You pay a price for this peace and that price can be high – sometimes high enough to actually disturb the peace since you start to worry about how to stretch your non-growing nest egg all the way through retirement. Erika Safran also pointed out the importance of keeping the costs down; costs do play a significant role in determining how long a nest egg will last.

Just like Tom Brown, George Jackson at Jackson Retirement Planning recommends a strategy that involves frequent re-balancing of the portfolio as the markets sway. (He received a lot of praise for rotating out of stocks in early 2008.) It is of course a strategy that relies heavily on being able to time the re-balancing correctly, otherwise you risk ending up in a situation where your portfolio is continuously reacting and taking losses rather than profiting from pro-active long-term investments.

Comments are closed.