Even if I was not in the profession, I would have to be living under a rock to be unaware of the fears associated with the looming retirement years for baby boomers. This is a concern across the board. Those who have been fortunate and those who have been less than fortunate have the same worry: "will I have enough???" This begs the question, “What is enough?” As one would surmise, the answer is different for everyone. The starting point begins with reviewing what you have, where you want to be, what are your expectations, and what, if anything, do you want to have left (for heirs, charity, etc.)? With longevity on the rise, the length of retirement is quickly approaching 20 years. Less than half of the adult population has no pension benefit, 35 percent have no money set aside for retirement, and Social Security – well – who can count on that?? Those facts equate to a nervous bunch of future retirees. Conventional retirement planning has long advised clients to hold equities in younger years and move to fixed income as they age into retirement. There is now a school of thought emphasizing the “equity glide path”. This is an approach that flies in the face of traditionalists. This theory basically suggests that clients draw down the fixed income portion of their portfolios in their early retirement years and continue to hold the equity portion with the hope of market upswings.In reading articles on topics such as this, I always come back to the same thought. There is NO hard and fast answer for any one retiree. As stated in the first paragraph, everyone is different. That is precisely why utilizing Modern Portfolio Theory and using asset class diversification to build a portfolio designed for each individual investor, their level of risk and cash flow needs makes sense. As a client of ours you undoubtedly know our philosophy on “staying the course” and long-term investing. This does not change as you ease into retirement years. Sure, your risk tolerance may begin to differ based upon various factors related to your needs, wants & desires, but that would not necessarily warrant a decision to utilize one portion of your portfolio versus another. We would undergo the same procedures we presently perform; communication with you on a consistent basis to ascertain our goals are the same, review the current allocation, & rebalance as necessary. Thus, if we are reviewing your financial position and risk tolerance as your retirement needs change there should be no need to follow a strict protocol of drawing down either the “equity side” or the “income side”. In summary, you need to have a plan, implement the plan and review the plan periodically. One size does not fit all. Your portfolio has full asset class diversification and is aligned with your preferred level of risk and cash flow needs. It is rebalanced to continually meet those needs; there is no need to abandon ship just because you are closing in on actually utilizing those assets. Happy Planning!
Ashley has been with DHG LLP for over 25 years and has worked in many facets. She began her career as an auditor in 1994, moving to the tax side shortly thereafter. Eventually she became a director in the tax department. Her focus was mainly on Physicians and Physician practices, consulting on operations and developing tax strategies. However, during this time she also worked with many other corporate and individual clients assisting them with their tax and accounting needs. In 2012 she decided to utilize her Certified Financial Planning license and moved to DHG Wealth Advisors. As a Certified Financial Planner and Financial Advisor, Ashley takes the time to get to know her clients and find out what their aspirations are. Together they develop sound financial plans designed to assist them in meeting their long term goals.