Revamping Asset Allocation for Retirees and Preretirees in Light of Increasing Yields

Financial planning expert Michael Kitces weighs in on whether higher bond and cash yields suggest that retirees and preretirees should hold more in those asset classes. 00:00 Introduction 00:28 Higher Yields and Asset Allocation Credit-Sensitive Bonds How Does Inflation Affect Asset Allocation? TIPS and the Bond Market Our guest for the video, “How Rising Yields Should Affect Asset Allocation for Retirees, Preretirees” is Michael Kitces. He is a financial planning expert and the head of planning strategy for Buckingham Strategic Wealth, co-founder of XY Planning Network and AdvicePay, and is the Chief Financial Planning Nerd for the advisor education platform Kitces.com and the Nerd’s Eye View blog. What to watch from Morningstar. 3 Pillars of Financial Wellness Why Bear Markets Can Be a Good Time to Invest Planning to Retire Soon? Flexibility and Spending Count Morningstar Investment Conference: Recession Risks and the Markets Read what our team is writing. Christine Benz Follow us on social. Facebook: Twitter: Instagram: LinkedIn: ...(read more)

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As bond yields continue to rise, retirees and preretirees must review their asset allocation and investment strategies to ensure steady income and manage risks. Rising yields may negatively impact the returns on fixed-income securities, which are often a crucial part of retirees' portfolios. Preretirees should consider a diversified portfolio, including a mix of bonds, insurances, and annuities, to provide guaranteed income streams. When fluctuations in the bond market affect the returns on fixed-income securities, the additional income can serve as an essential income source to cover living expenses and benefit from growth in equities and other investments. Retirees could also benefit from adding inflation-protected securities, such as treasury inflation-protected securities (TIPS), that would provide a steady stream of income adjusted for inflation over time. As investment risks increase with rising yields, a comprehensive investment management plan with professional guidance can help retirees preserve their retirement nest egg. In response to rising yields, retirees should also assess their risk tolerance levels and determine any necessary adjustments to their asset allocation. While some may be comfortable with higher exposure to equities and other growth assets, others may prefer to shift to lower-risk investments such as money markets and short-term bonds. Moreover, retirees and preretirees should monitor the fixed-income securities and diversify their portfolios to mitigate against risks. In this regard, they should reduce allocation to bonds that carry greater risks of default such as high-yield corporate bonds or emerging market bonds. At the same time, they could increase their holdings of blue-chip stocks, dividend-paying equities and other growth assets. Overall, rising yields should prompt retirees and preretirees to review and adjust their asset allocation strategies continually to ensure that their investments align with their risk tolerance levels and provide a steady stream of income. The right mix of investments and professional guidance can help retirees achieve financial security and a comfortable retirement. https://inflationprotection.org/revamping-asset-allocation-for-retirees-and-preretirees-in-light-of-increasing-yields/?feed_id=105848&_unique_id=6482d6ce0e7fe #Inflation #Retirement #GoldIRA #Wealth #Investing #assetallocation #assetallocationinretirement #assetallocationstrategy #bondmarket #bondyield #cash #inflationhedgeinvestments #inflationprotectionstrategies #investagainstinflation #Retirement #retirementplanning #tips #wealthprotection #InflationHedge #assetallocation #assetallocationinretirement #assetallocationstrategy #bondmarket #bondyield #cash #inflationhedgeinvestments #inflationprotectionstrategies #investagainstinflation #Retirement #retirementplanning #tips #wealthprotection