Now That You're Retired, Maximize Your Retirement Income
Investing during retirement can present conflicting interests. On the one hand, retirees seek investments that provide security and stability of income to meet their day-to-day expenses. On the other hand, retirees want to be sure that their investments outpace the cost of living and will not run out.
As a retiree, a significant portion of your principal will likely be invested in bonds and other fixed-income investments to provide a consistent stream of income. How much risk you need to take with these investments depends in part on how much income you need. One strategy may be to match debt maturities with your anticipated needs. Alternatively, annuities can generate a steady income flow and help you shield investment earnings from taxes.
Although you may be living on a fixed income, only a portion of your money should be invested for the short term. Todays longer life expectancies mean a component of your portfolio may be invested for 20 or more years. Stocks have historically offered the best potential for fighting inflation over the long term, although past performance is no guarantee of future results. You should also consider your payment options for your company pension and retirement plans. You may also elect to begin withdrawals from your IRAs. Your financial advisor can help you determine which distribution strategy best suits your changing needs.