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Structuring Your Retirement Portfolio Responsibly

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Shed risky stocks

One recipe for endangering your financial future is having an investment portfolio full of risky stocks. Even if you only hold a few risky stocks, you might want to sell them. Volatility is easier to handle when you’re a long way from retirement: Should one or more such holdings plunge, you’ll have time to wait for rebounding prices, and if a holding simply goes down in flames, you’ll still be working and able to keep adding money to your investment portfolio.

There are plenty of stocks that are too risky for us at any time. These include stocks where you don’t really understand how the company makes its money, where you don’t see sustainable competitive advantages, or where the stock is simply overvalued.

Take advantage of different account types

Like anything in life, retirement isn’t a one size fits all kind of deal, which is why there are an array of accounts that savers can choose from. Finding the account that best suits you is important, because depending on your income, tax bracket, how willing you are to delve into retirement savings, the standard 401K might not be for you. Between a self-directed IRA, precious metals IRA, Roth IRA, or Traditional IRA, or a 401K, you have options within your options that will help or hinder your portfolio depending on how you work them.

Consider buying annuities

One of the best things you can do as you age is take more pressure off yourself financially — and a great way to do that is via annuities. If you build an annuity or two into your retirement portfolio, you can receive dependable income without having to keep track of any investments.

Focus on fixed annuities, not variable or indexed ones, as they can be more problematic, with high fees and restrictive terms. A fixed annuity offers a fixed income (possibly increasing with inflation, if you pay for that feature), that can start arriving immediately or in the future. As an example, with a $200,000 investment, a 70-year-old couple might be able to collect close to $1,000 per month in fixed annuity income for as long as at least one of them is alive. A 65-year-old man could spend $100,000 today for a deferred annuity that pays him about $1,200 per month beginning at age 75. Deferred annuities can help you not run out of money as you burn through your nest egg in retirement.