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Allocating Your Retirement Portfolio

27 July 2022

Our last post talked about retirement planning during times of market volatility, such as we are at present experiencing.

This week, we are going to discuss how to allocate your retirement portfolio.

And how do you best do that? The answer, as it so often is – it depends. There are so many factors to consider in designing a portfolio they are too many to list, but they include:

  • Your age
  • The age at which you hope to retire
  • The size of your portfolio
  • Your individual risk tolerance
  • Whether you are paid by salary or independently
  • Whether you have a pension plan, or will have only your own savings (plus any employer match in the case of 401(k)s and similar plans) to add to Social Security in financing your retirement.
  • Your goals for your retirement
  • And the retirement income which will be needed to achieve those goals

Generally speaking, it’s best to diversify. There’s a reason “don’t put all your eggs in one basket” is so time-honored a phrase.

But even “diversity” has a diverse range of options.

Investment options, roughly speaking, come in three flavors:

  • Cash and cash equivalents. While I’m not a fan of keeping too much in cash – especially for those whose retirement is decades away – having some immediate liquidity is a good plan in case of emergencies.
  • Short-term and intermediate-term bonds. These are fairly stable investments, and those approaching retirement near-term should as a rule have a very healthy portion of their assets in such bonds. However, the most risk-averse may want to put more of their assets into bonds, sacrificing the potential higher returns stocks offer for the sake of lesser volatility.
  • Longer-term bonds and stocks. No matter how low your risk tolerance, no matter how volatile the market, some of your retirement assets should be invested in these, due to their greater potential for growth (and in some cases, the added benefit of dividends). The rule of thumb is that investors with a longer savings timeline for retirement should have more equities in their portfolios, those with a shorter timeline, less.

But a “rule of thumb” is a one-size-fits-all strategy. While one size may fit many reasonably well, no size fits all. And, as anyone who’s bought clothing both off the rack and bespoke knows, a custom tailoring fits best.

And, just as your tailor will take new measurements for a new suit, in case you’ve grown here, or shrunk there, your retirement portfolio needs regular re-measuring against your financial situation, your family’s needs, and your goals – all of which are in the regular course of life subject to change.

For the best allocation of your retirement assets, consult your CPA/financial planner regularly – s/he can help you determine – and re-determine – what is best for your retirement planning, custom-tailor your portfolio to the current market climate, your financial picture, your and your family’s needs both current and future, and your long-term goals.

Someone who’s eager to buy and run a vineyard when they retire will have very different financial needs than someone who longs to downsize to a cozy cottage and live quietly among the roses.

And your financial planner understands that different goals require different investment strategies.

Your financial planner can recommend the optimal allocation strategy to help you reach your unique goals.

If you are wondering whether your retirement portfolio is really allocated in the most appropriate fashion for you, please reach out to us – our advisors are at your service.

Please click here to email us directly – let us know how we can help.

Until next time –



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