It’s hard to believe we’re already nearing the end of 2019. This year has flown by and 2020 is almost upon us. If you’re like many people, you use the end of the year to evaluate the past and make resolutions for the future. Your financial strategy might be included in those resolutions.
This year has been a rollercoaster for many investors. While the markets have moved higher and hit new record levels, that growth hasn’t come without a few bumps. Through November 20, the S&P 500 has increased by 24% year-to-date. However, the index also experienced several sharp downturns, especially through the summer.1
If you’re approaching retirement, you may not have the same comfort level for risk that you once did. This may be the time to review your retirement strategy and implement changes that can reduce your risk exposure. Below are a couple of steps to consider as you make your 2020 financial resolutions:
Protect yourself from risk.
Are you less comfortable with risk and volatility than you were in your younger years? That’s natural. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss.
There are a few steps you can take to reduce your exposure to risk. One is to review your allocation and risk tolerance and make sure they’re aligned. Your risk tolerance is your specific comfort level with market volatility. It’s based on your unique needs, goals, and time horizon.
As you get older, your risk tolerance may change, so it’s important that your strategy changes along with it. You could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize financial vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure.
Guarantee* your income.
Income planning is one of the most important elements of any retirement strategy. Generally, the goal is to generate enough income to cover your expenses so you don’t drain your retirement savings. If you have to withdraw too much money from your savings in the early years of your retirement, you may not have assets left in the later years.
Fortunately, you’ll likely receive at least one source of income that’s guaranteed* for life from Social Security. You also may be fortunate enough to receive a defined benefit pension.
You can also take steps to convert a portion of your retirement savings into a guaranteed* income stream. There are a number of different financial vehicles available that can be used to create a source of income that is guaranteed* for life, no matter how the market performs or how long you live.
You could reduce your risk and protect your financial future by guaranteeing* a portion of your income in retirement. If you’re nearing retirement and haven’t explored options for guaranteed* income, you may want to take that step in 2020.
Ready to get back on track for retirement in 2020? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
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