Market declines in early retirement can be especially damaging to your accumulated assets. Known as sequence of return risk, withdrawing money while your savings are dropping in value will impact the longevity of your portfolio. You’re essentially selling at the wrong time, and it can lead to running out of money in retirement. One way to prevent this is to keep a portion of your savings in conservative investments.

It’s also important to protect your assets from tax liability. By minimizing your lifetime tax obligation, you can maximize the money left to spend and leave to your heirs. There are several financial strategies that promote tax-efficiency, such as contributing to a Roth IRA or using a Roth IRA conversion. While you might face higher taxes in the short-term, you can enjoy major long-term savings through tax-free growth, income, and wealth transfer.

A major life event, such as the need for long-term care, can also threaten your financial stability. If you have significant savings, you might consider self-insuring for the risk by setting aside some assets specifically for health care costs. Long-term care insurance, whether a standalone or hybrid policy, is another viable option. You can also transfer money into an irrevocable trust to protect your assets from nursing home or home health care expenses, provided it’s set up well in advance.

Many risks to your assets can be anticipated and sidestepped with sound financial advice. Talking with a financial advisor professional can help ensure your assets are protected and available for you to enjoy.

At Johnson Brunetti, we believe asset preservation goes beyond a diversified mix of securities. Rather than relying on fixed income securities and bond funds, we prioritize products with downside protection that can weather the market cycles of a typical 20- or 30-year retirement. For example, we favor insurance products like fixed index annuities which can limit or eliminate downside losses while providing upside potential.

Our primary focus is not how much you’ve saved, but rather what rate of return you need for a successful retirement. Balancing your portfolio risk and return becomes crucial as you age. You may be taking on more market risk than is necessary for your financial goals. We believe in prioritizing investments that offer more reliable and consistent returns.

• How will I fare if there is another Great Recession or DotCom Stock Bubble?
• How can I safeguard against rising health care and long-term care costs in retirement?
• How significant of a risk is rising inflation?
• How can I effectively reduce my tax bills?
• Is it wise to keep all my retirement savings in tax-deferred plans?
• What should I do if my retirement coincides with a market downturn?

Tax-efficiency also boosts asset preservation. Instead of focusing on your annual tax bill, looking at your lifetime tax obligation can lead you to use different financial strategies and investment tools. For example, doing a Roth IRA conversion, which moves a large nest egg of tax-deferred assets out of a 401(k) or traditional IRA, can help reduce your long-term tax burden so you can enjoy more spendable income in retirement.