Submitted to Christopher Cole, Physician’s Weekly
Submitted by , Red Five Communications
As physicians continue to battle the ongoing pandemic, many are looking longingly at their retirement. Getting close to that storied finished line is not all fun and games. In fact, it may become the most stressful time of your investing life. The term retirement red zone is a very apt way to describe those handful of years before retirement and just after retirement begins.
Sports metaphors are always a preferred choice in the investing world. And according to Kiplinger’s, this concept of a football red zone, which is twenty yards before the end zone, helps to describe how the stakes get higher, the risks gets riskier, and the cost get dearer as you push on through to the retirement end zone.
It is time to readjust. The investing you did in your 30s is not the investing you should be doing in your 50s. When you were just beginning to accumulate wealth, you had decades to catch up if you faced economic hardship or a stock market meltdown. This is no longer true when you have a decade left before your planned retirement date. This is no time to chase down hot stock tips; this is the time to consider prudent, low-risk options.
To that end, as you move closer to your retirement date, you should begin adjusting your portfolio to lessen your exposure to risk. You will still need some growth in your portfolio to help generate your retirement income, but you should also look toward low-risk products that will preserve the wealth you have accumulated throughout your working life.
Make sure you have a realistic perspective of time. People are living longer. Is your retirement account ready to fund you for potentially 30 years? Keep this in mind as you strategize. You may even need to add a few more years to your working life just to make sure you are covered. These days a nest egg needs to be big and bulletproof.
Before you hit the retirement red zone make sure that you have a plan in place with your financial advisor as to how to limit your risk exposure, preserve your wealth, and develop a distribution plan that will last for the whole of your retirement.