Asset Allocation in Retirement Planning – Balancing Growth and Security

asset allocation in retirement planning
February 13th, 2024 0 Comments

Asset allocation planning is essential at any age, but its importance grows as you consider how asset protection planning and strategic asset allocation will impact your retirement years. 

Regardless of whether you keep careful track of your investment portfolio or simply divert a portion of your paycheck to a retirement account or two, you need a resource like Saddock Wealth to ensure that you’re on the right track. Planning for retirement is an evolving process with many moving parts and strategies. For instance, like creating an asset protection trust or shifting your assets the closer you come to retirement age. 

An expert partner like Saddock Wealth can clear a wide path to a happy and successful retirement (with a legacy to leave to loved ones). Therefore, asset allocation planning should begin with the following steps. 

 Adjust Your Asset Allocation for Your Age 

Making sporadic financial moves that correlate with the constant rise and fall of stocks or other assets can be risky, especially as your retirement looms.  

Instead, it’s more beneficial to adjust your asset allocation based on age to mitigate risks while avoiding the anxieties of market volatility. 

A general guideline for how to invest is as follows: 

  • If you are under 50 years old, you can invest heavily in stocks as you’ll have ample time to ride out any market turbulence. 
  • In your 50s, you may want to consider adjusting your portfolio to include a more modest majority of stocks (such as 60% stocks and 40% bonds), depending on your risk tolerance, as well as your current finances and future ambitions. 
  • Once you’re retired, it may be a wise strategy to take a more conversative approach (such as 50% in stocks and 50% in bonds) to ensure that you have funds on hand for your imminent adventures. 
  • Always have an emergency fund that’s entirely cash so you can access this portion of your savings easily and within a moment’s notice without accessing the other assets in your portfolio prematurely. 

 Consider Your Risk Tolerance 

You may have heard of common or generalized rules for asset allocation. For instance, the rule of 110 as people live longer. In this rule, the percentage of stocks in your portfolio should be 100 or 110 minus your age. So, for example, if you’re 65 years old, you should have 35% or 45% of your portfolio in stocks. 

These sorts of basic rules are a good place to start, but they don’t consider many other factors, such as your inherent risk tolerance. The importance of peace of mind can’t be underestimated, and your portfolio should reflect the amount of risk you are comfortable with taking.  

Diversify Your Holdings within Each Individual Asset Class 

Diversifying among the major asset classes, like stocks, bonds, and cash, is essential, but smart asset allocation takes this diversification further. 

It’s helpful to have diversification within each asset class in your portfolio to mitigate risk even further, especially as you approach retirement. For example, in stocks, you may want to allocate 60% to U.S. large-cap stocks, 10% to U.S. small-cap stocks, 25% to developed international stocks, and 5% to emerging markets. Bear in mind that this is just an example of how one particular asset class can be allocated. Furthermore, you’ll need a financial expert partner to help determine how to distribute the right amounts in the right areas based on your distinctive financial situation. 

Partner with Saddock Wealth for Your Asset Allocation Planning for Retirement Needs  

The market is constantly evolving, and financial trends and smart financial strategies may no longer be available in 5, 10, 20, or 30 years from now. It’s also challenging to determine just how much money you’ll need when you’re retired and how – exactly – to get to this goal line without financial hurdles. 

This is where Saddock Wealth can help. At Saddock Wealth, our services and guidance are tailored to every individual client. Our expert financial advisors ensure that your asset allocation planning aligns with your long-term retirement and financial goals.  

Remember that asset allocation for retirement planning is not a one-step procedure. Moreover, it is a constant attention required to ensure your portfolio is continually performing at its best and is on track to give you a secure financial future for many years to come. 

 Connect with the expert team at Saddock Wealth today and have a clear way forward toward retirement while enjoying years of peace of mind along the way.  

Contact us today!  

Asset Allocation
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