734.641.8400 December 2018
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2017 PSCU
Board of Directors
Frederick W. Morgan

Jeffery King
Vice Chairperson

Dean J. Trudeau

Edward A. Carey, Jr.
Charles Lowler
 Dale Reaume
Nora Sharpley
Credit Committee
Veronica Massey
Huey Ferguson
Juanita Henry
Adjusting Your Investments for Retirement
How to get your retirement portfolio across the finish line

The end goal of every hard-working American is a long, fruitful and well-earned retirement. If you are still in the early stages of putting together your retirement portfolio or bearing down on the golden age, there’s still time to make adjustments that can help put you in the position to realize that dream with little or no stress.

Increase your contributions

The closer you get to the finish line, the more you will want to make sure you have sufficient savings waiting there for you. If you’re already meeting and exceeding your employer’s maximum contribution for matching, you’re in the right position, but there’s still room to increase your contributions with each passing year.

Mint spokesperson Rich Heineman tells NBC News’ Kelsey Butler that a good place to start is with an automatic escalation of 1 percent every year. If you receive a pay raise but already enjoy a comfortable lifestyle, use that increase to supplement your retirement savings rather than letting it idle in your checking or savings accounts.

Reallocate your assets

It is likely that your retirement portfolio is target-based, which means it is aimed toward providing a set amount of money for you to enjoy by the time you retire, rather than based on risk. If you want a portfolio that will provide for you throughout your retirement, the Financial Industry Regulatory Authority recommends finding a balance between growth investments and investments that produce income.

The former are growth mutual funds and stocks that are projected to grow faster than the market average. Financial professionals consider them important because they allow your retirement portfolio to avoid issues caused by an increase in the cost of living brought about by inflation. Income-producing investments are stocks that pay out dividends, certificates of deposit and bonds. They are more consistent in their ability to produce money, providing the funds you need to live on in retirement.

Asset allocation is a step that the FINRA recommends carrying out gradually and with the assistance of a financial planner or investment professional.

Don’t live and die by the 4 percent rule

In 1994, financial advisor William P. Bengen concluded that a retiree aged between 60-65 would only need to withdraw 4 percent of their portfolio in the first year of retirement and that they would need to adjust that withdrawal each subsequent year for inflation. The 4 percent rule, confirmed in the popular Trinity Study, has been an oft-relied upon rule of thumb to make retirees feel confident that they can live off of their retirement funds for 30 years.

According to Jane Bennett Clark, the late Senior Editor at Kiplinger’s Personal Finance, today’s financial environment instead suggests a 2.5-3 percent withdrawal to ensure that you have enough money to last for a 30-year retirement. David Blanchett, head of retirement research at Morningstar Investment Management, suggests that the 4 percent rule is a great place to start, but that you should adjust and act accordingly when the market demands.

Whether you’re just getting your 401(k) together or reassessing your portfolio 10 years in, there is room to improve your chances of a happy and stress-free retirement. Talk to your financial advisor and learn what you can do to capitalize upon your retirement plan.

Published by Public Service Credit Union
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Disclaimer - All content contained in this newsletter is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions. Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this newsletter are the opinions of the particular author only.  

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