How Should I Position My Savings for Retirement?

From building to positioning

While you’re working, the job of your savings is to grow. Once you retire, it has a second job: to pay you, month after month, without being forced to sell at a bad time.

A holistic investment strategy is based on your goals for growth and income from your assets. We develop strategies with you on how to allocate your assets in retirement and non-retirement investments, real estate, commodities, and/or collectibles.

It runs in two parts: four steps, then three buckets.

Part I: the four steps

1. Anticipate income needs two years before needed. Plan withdrawals ahead, so the money is ready when you need it and nothing has to be sold in a hurry. Determine when large distributions are desired: regular income, large purchases, gifts to family.

Ask yourself: what large expenses do I expect in the next two years?

2. How much do you want protected? How much of your assets do you want to have protected against loss of value or loss of income? Not every dollar needs the same protection. Deciding how much does is the starting point.

Ask yourself: how much could my savings drop before I’d change my plans?

3. Estate and tax efficiency of assets. Where your assets are held, and how they pass on, affects how much you and your family keep. We look at the taxes along the way (now and later) and what happens when assets pass to your heirs. Tax Strategies goes deeper.

Ask yourself: do I know how each account is taxed, and who it passes to?

4. Maximize the remainder of your portfolio. Once income, protection and taxes are planned, the rest of your portfolio can be positioned to grow. That’s where the three buckets come in.

Ask yourself: is the rest of my money working as hard as it can?

Part II: the three buckets

The goal: maximize your investment portfolio. Each bucket has one job.

• Bucket 1: Bonds and Cash, about 10% of assets. Steady and easy to reach: the money your next two years of income come from. Because it is steady, market swings do not decide when you can draw your income.
• Bucket 2: 50/50, about 35–45% of assets. A balanced mix of stocks and bonds. Income Assets Used In Years 3 to 9. It refills bucket one over time.
• Bucket 3: Stocks and Equities, about 50–55% of assets. Positioned for long-term growth. Because the next decade of income is already covered by the first two buckets, this money has time to ride out the ups and downs.

The percentages are rules of thumb, not a recommendation for any one person. Your allocation is set around your own income needs and goals. All investing involves risk, including the possible loss of principal.

See the strategy laid out, bucket by bucket.

Let’s build your strategy together

We work through all four steps with you, then fill the three buckets around your own income needs and goals. Not sure you’re ready to retire yet? Start with Am I Ready to Retire?