Southern Springs Insights

 

Investing in Pre-Retirement Years
August 22nd, 2022

Most investment advisors generally encourage younger investors to be more aggressive since they have more time for their investments to compound and more time to recover if their investments have periods of decline. On the other hand, investors usually encourage retired investors to be somewhat more conservative since they aren’t constantly adding to their investments and may not have as much time to recover in a downturn. 

One thing that I think people ignore is what to do in the “in-between years.” For simplicity, let’s say you’re within five years or so of retirement. What should you do differently over the next few years?

Find Out Where You Stand

If you’re in this position, your first step involves a little informed long-range planning. Take a look at projections to see where your nest egg and future sources of income in retirement stand. I’m always surprised how many people have never done this. But the first step in knowing whether you need to adjust your strategy is to know what position you are in currently. 

Be Mindful If You Think You’re In Great Shape

Some people will find that they are in great shape and have the luxury of becoming more conservative with their investments if they want to. This position can potentially reduce the chance of a down market disrupting their retirement plans. Sometimes this can be a significant change, and sometimes it can be more subtle. Remember that the current life expectancy in the US is 79.05 years, so if they are in great shape at retirement age, they still need their nest egg to last in most cases.

If You Think You Need To Catch Up

Some people will find that they are behind schedule, which can get more challenging. This may mean, in some cases, that you shouldn’t back down on the aggressiveness of the investments just yet. But it could mean you make different adjustments, such as retiring later or boosting savings and investment rates. It could be a combination of all of these things. 

You probably should be somewhat conscious of where we are in the market cycle. If you get within a few years of retirement and are contemplating these changes, but when the market is down quite a bit, maybe you don’t make the shift “exactly” when it looks like the right time on paper. Perhaps you let things recover a little bit before making a significant shift.

Now is the time to start planning for your future. Whether you’re in the in-between years or ready to take your next step, an investment advisor can help you create a map for where you want to be in the future.

David Jackson, MBA, CFP®, C(K)P™, is the Managing Partner at the Southern Springs Capital Group. For more information on Southern Springs Capital Group, visit www.southernspringscapital.com. Our offices are located at 2555 Meridian Boulevard in Franklin. We can be reached at 615-905-4585.

Any opinions are those of Southern Springs Capital Group and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Diversification and asset allocation do not ensure a profit or protect against a loss.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.

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