A Six-Step Guide to Investing After Retirement

Mature couple planning

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You may be retired after saving consistently for retirement and still consider investing. Depending on your situation, investing after retirement may include ensuring new investments do not jeopardize your retirement nest egg. For this reason, finding safe strategies that protect your money but allow you to have asset growth is essential. Here is a six-step guide for those interested in investing after retirement:

Step 1

Review your financial plan again

Investors often think that financial planning is for the accumulation phase, but financial planning is also for the spending downstage. With the pandemic and recent market volatility, meet with your financial professional to ensure that your retirement portfolio allocations align with your investment strategy. Also, consider if investing will negatively impact your retirement income or not.

step 2

account for risk

Investing in a down market can allow for the purchase of more shares. However, retirees need to be aware of the investment’s risk score since they will hold the investment for a shorter duration due to withdrawing each month. Their investment may need to liquidate during a period of low valuation, causing a loss on their initial investment. For this reason, a retiree’s investments should correlate with a lower risk score.

step 3

watch inflation

Inflation can cause a portfolio to liquate faster than expected due to inflation risk. But positioning it by increasing positions such as gas and energy and consumer staples may produce a higher return than the inflation rate. However, once inflation is on the decline, it is time to reposition to investments that are not interest-rate sensitive.

step 4

consider guaranteed income investments

Often retirees view bonds as ‘safe investments,’ but that is not necessarily true today as bond rates are below the inflation rate, resulting in negative performance.

Another investment to consider is a Fixed-indexed annuity. Fixed-indexed annuities produce returns based on an index, such as the S&P 500, and your initial investment is protected. Fixed-indexed annuities are a contract with an insurance company that provides you with guaranteed income in retirement.

step 5

explore real estate investment trusts (REITs)

REITs invest in commercial properties or mortgages and, by regulation, must distribute 90% of their taxable income in the form of dividends to investors. REITs develop and improve their properties to produce returns, eventually sell them, and reinvest in other properties, making a positive return for investors.

step 6

work with your financial professional

If you are retired and considering investing, now is a great time to meet with a financial professional to determine a strategy aligned with your goals and investment horizon. Trajan Wealth has experienced fiduciaries who can help. Contact us today.

*Advisory services offered through Trajan Wealth, L.L.C., an SEC registered investment advisor.

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