Entering Retirement - What To Do With Your Stock Investments
This article is directed specifically to those of you who are approaching retirement and want to know what to do with your stock investments. The markets have recently done well for investors, and for those of you who are just about to enter retirement, the timing couldn’t be better. Now is the time you realize your gains, and get out while the getting is good.
George Mannes of CNN Money recently interviewed William Bernstein, who is an investment expert, financial author and high-net-worth client advisor. In an article entitled The worst retirement investing mistake in Bernstein explains that retirees have no place in risky investments like stocks.
“I began to understand this point 10 or 15 years ago, but now I’m convinced: When you’ve won the game, why keep playing it?” says Bernstein in response to stock market investing in retirement.
Here at First Senior Financial Group we couldn’t agree more.
Financial management is a lifelong process, and by no means does it end at retirement. However, it does change a great deal. Hopefully you have been keeping retirement in mind throughout your career, saving up so that you can enter retirement with a secure financial standing that will see you through your golden years. Essentially, so far you have been handling your finances with a focus on building wealth.
During your building wealth stage you have may have been working with investment options that provide high growth to your savings. Of course this is no easy task and is associated with high risks and management fees, but that is just the name of the game when you are trying to build wealth. Although it is a risky place, the idea behind stock investing is that while you are still working you can always contribute more when your investments do poorly. Your insurance against risk is that you are still making money that can go towards your savings.
However, as you enter retirement there will be a change from building wealth to preserving wealth, as you will no longer be contributing to your nest egg but rather you will be living off it.
When you enter the preserving wealth stage, a major change of focus takes place within your financial management. You are now focused on how to live off of your accumulated wealth as efficiently as possible. For this to be achieved, you should be considering investment options with little to no risks attached to them. You should rather be shopping for reliable long term investments.
This transition into retirement requires a lot of research and education before you can confidently optimize your nest egg while avoiding taking on risks that you can no longer afford. In order to be best prepared for retirement it is helpful to consult a retirement phase advisor that is better equipped to manage your finances to better serve your new goals.
Those of you who are invested in stocks and just about to enter retirement should be in a good place to make the transition from building wealth to preserving wealth. As we’ve all seen, the stock market has its ups and downs. If you are lucky enough to be entering retirement while the markets are up, you have won the game.