Date: January 9, 2023

Why You Should Regularly Update Your Retirement Projections

Retirement planning is an important process that should become a lifelong habit, especially if you are a high-net-worth individual. Given today’s challenging economic and investment environment, it’s even more important to regularly revisit and refine your long-term projections and strategies. Otherwise, you’re driving blindly into the future.

Keeping them up-to-date can help ensure that you are prepared for whatever uncertainties may arise in your post-retirement life. This is good because, unfortunately, car accidents, divorces, and lawsuits lack the courtesy to avoid troubling seniors. The hard truth is that the cost of long-term care isn’t going down anytime soon, either.

This article discusses the following:

  • Volatility’s cyclical, but the bond market’s in uncharted waters
  • A 60/40 allocation is no longer the safe harbor it used to be 
  • How to protect your retirement against stock market volatility
  • Let Heritage Capital streamline your business & personal finances

Volatility’s Cyclical, but the Bond Market’s in Uncharted Waters

The volatility of the bond market has been all too familiar in recent years. However, the current state of affairs is unprecedented. Even the affluent, who have historically sought refuge in the relative stability of bonds, have experienced a destabilization of sorts lately. 

Experts continue struggling to make sense of this new environment at times. It almost seems to zig, deliberately, when everybody expects that it will zag. If you’ve read this blog, watched my videos on YouTube, or both for any length of time, you know that I’m not typically a pessimist. I don’t wear rose-colored glasses, either. My analyses are based on concrete data and decades of professional experience in the financial industry.

With all that said, it remains difficult to say with any certainty how long this period will last. The stock market tends to behave cyclically—and volatility is an occasional part of its longer-term cycles. It seems probable that once inflation is lower, things will start to improve. Nevertheless, no one can be certain whether we are entering a new phase or making another lap first.

The current state of the markets and global economy have made one thing clear: Everyone needs to take inflation and market volatility seriously. Even the affluent may not be immune to their effects if you don’t plan ahead. Financial stability may appear to cushion you from the effects of inflation at first, but the reality is that no one is immune to its impact on a currency’s purchasing power over time. 

As a result, the money that you’ve invested today is not necessarily going to have the same worth when it comes time to use it later. If a wise investment strategy isn’t in place, you could be left with much less than you anticipated after all is said and done. Taking proactive steps to offset the negative influence of inflation can help ensure that your wealth remains secure for generations to come.

A 60/40 Allocation Is No Longer the Safe Harbor It Used To Be

The classic balance of assets is no longer delivering the returns or stability that it once delivered from the bond market: The 60/40 ratio, that old retirees’ friend, has only done worse and worse lately. This is why I can’t recommend it. I’ve always known the catastrophe in bonds was coming sooner or later and now the risk is probably more than some retirees-to-be should try to handle. 

Fortunately, there are other options for potentially mitigating risk without sacrificing returns. For example, you could look into retirement funds that offer more allocations of lower volatility stocks as well as fixed-income securities that don’t just follow the major bond index. It may also be wise to limit your exposure to any one type of asset class, such as a single sector or country. 

Additionally, consider diversifying any fixed-income investments across different maturity periods to benefit from lower risks (and hang onto long-term income-generating potential). Taking these steps, along with thoroughly researching any other viable strategies, may help.


Heavy Losses Got You Thinking of Switching Advisors? We May Have the Strategy You Need.


How To Protect Your Retirement Against Stock Market Volatility

Protecting your nest egg against stock market volatility is a common concern. One strategy to take advantage of the volatility is through tax loss harvesting, which involves monitoring taxable accounts and selling stocks at a loss to offset taxable gains elsewhere. 

Another tool is diversification, spreading investments not only across different asset classes but strategies as well to help protect your overall portfolio should one of the markets experience volatility. In other words, if you aren’t heavily invested in one individual asset type, your odds of a catastrophic effect are reduced. 

If you only hold a few shares of a citrus grower, for example, and harsher-than-normal freezing temperatures ruin the year’s grapefruit crops, you’re unlikely to lose your shirt. Similarly, investing in low-cost index funds that track broader markets may be cost-efficient while helping to protect your portfolio. 

Admittedly, retirement planning can sometimes seem daunting as stock market volatility continually changes the rules of the game, but there is hope. For example, you can protect your retirement against the market’s unexpected dips by drip-feeding into alternative investments. 

For example, on top of diversifying your long-term portfolio and potentially increasing returns, real estate can help provide additional security through mortgage-backed securities. Since its value is derived from that of its physical neighbors; not the stock market, it tends to shrug off market roller-coaster rides.

Meanwhile, investing in commodities can also act as a buffer against fluctuations. They remain less affected by U.S.-based economic incidents, but they’re also highly liquid, meaning they can provide quick access to cash when necessary. 

Let Heritage Capital Streamline Your Business & Personal Finances

retirement portfolio projections

Keeping up with your personal finances can be overwhelming and time-consuming. However, with the help of Heritage Capital LLC, the stress of managing your wealth can be taken off your plate. Our team offers world-class fiduciary wealth management services to streamline both the business and personal facets of your financial life.

From asset diversification to tax planning, the strategies we recommend are custom-tailored to help you meet your financial goals. This is because we are committed to working closely with you and developing a strategy that meets your individual needs. 

Financial peace of mind can still be found, but the search has to begin with selecting an exceptional wealth management firm. We specialize in high-net-worth retirement planning and estate planning. Contact us or schedule a free consultation.

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Paul Schatz, President, Heritage Capital