As we age and our lives change, so should your investment strategy. You should be looking more for stability and retirement investments and less towards grow or riskier mutual funds and individual stock holdings and start making a transition into safer and more conservative choices in your portfolio. But when do you know to start changing these positions?
Starting to change positions in your portfolio varies depending on your future plans and when you will select to retire. Are you going to retire at 62 or 65 or even 70? We need to talk about that a little first.
Men in the overwhelming majority have shorter life spans than women. That should be a know fact I need not have to explain. For the average man, if you are making a low to mid range salary ALWAYS retire at age 62 and start collecting your Medicare and Social Security Benefits. The reason why is the odds are in your favor that if waiting until age 65 or 70 to retire you will never live long enough to make up the difference in payment had you retired at age 62. No one says you cannot continue to work or volunteer to keep yourself busy, but you will be limited on how much money you can make without being penalized. Make sure to work part-time and stay under that limit. When you turn 65 you can continue to get full Medicare and Social Security Benefits and can return to work without penalty and work as many hours as you want to if that is your desire.
Women live longer in the overwhelming majority than men do. So my advise differs for this reason. If making a lower or average income you should remain employed until 65 before making future decisions about your retirement. Why? There are two main reasons. One is obvious, women live longer and the other is women in our warped society tend to make less than men, even when performing the same job. Sorry, but I can't change that fact.
If you are in a HIGH tax bracket making $250, 000.00 or more per year AND you have invested wisely during the course the course of your life and sit on a nice portfolio, then you have to think about things and consult your financial advisor as if it is to your advantage to retire if you do not have your heart set on retiring. Your options are more flexible and open than the average income earner.
So we are going to focus on men and women in the low to high average income bracket as they are the ones that find themselves needing more options and advise for their future.
SINGLE Men: Follow my advise above. Single men I will assume following that advise will retire at age 62. Thus you have to start thinking about things earlier. In your early to mid 50's you need to start converting your mutual fund holds out of grown into more balanced and conservative Mutual Funds and not be so focused on growth. Your time for growth has come to an end. A good conservative or balanced Mutual Fund will still grow but perhaps not as well as a growth fund in a bullish market. If you have Individual Stocks you need to begin to sell them off and move those funds into the more conservative Mutual Funds. Around the age of 60 single me need to look at moving things out of the conservative Mutual Funds and move your holding in to Income Mutual Funds. I personally use FKINX as I am in the age brackets we are talking about. I am below the age of 62, but retired. So I am making slow progress into moving my assets into this income funds. This fund is very hard to beat and the best I have found currently on the market bar none. Even my personal financial adviser was shocked to this find. I am very proactive in my portfolio choices. Once you officially retire at age 62 most if not all your assets should be in this and/or other solid income funds. I like FKINK (Franklin Fund) because I know it is solid and have been around since the 1930's and currently is yielding some nice dividends for me each MONTH. Once you retire you can take a monthly, bi-annual, quarterly, or annual payment in dividends. I never advise taking out more than the dividends you earn that will dip into and decrease you principle.
SINGLE Women: Petty much everything is the same as the Single Men, but you have to factor in a 3 year difference in retirement age. So take everything I said about the Single Men and add 3 years to the ages I quoted. That simple.
Married Couples: Sorry to say ladies, but the men rule again. The plan will be the exact same for the single man retiring at age 62, but you ladies will have to keep on working until age 65. Think of all that free time your husbands will have to get projects done around the house and take care of their daily "honeydew" list each day while you go to work. You should be coming home to a ship shape home everyday after work.
I sincerely home some of this advise is helpful to the ageing investor age 50 or over as you begin to think about your future retirement. Happy to address any questions you may have, as always.
Gus S.
Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.
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