Planning To Retire in 5 Years? Crucial Advice for a Smooth Transition

Retirement is staring you in the face. You’re going to retire in five or so years. What changes should you start making to your portfolio now to make sure that you can have a successful retirement, a retirement on purpose, and a retirement with purpose? Folks, my name is Tyler Dunkelberger. I’m with Reliance Financial Partners, and today we’re just going to go over how we help our clients structure a low volatility portfolio to help them get through any of the volatility through your retirement years. So let’s look at a tail of two portfolios. We have portfolio number one. Portfolio number two, we’re starting out with a million bucks in each one. First year in portfolio number one, we’re swinging for the fences. We’re ultra aggressive, we hit a home run and we make a 60% return. We’re left with $1.6 million. Retirement is looking fantastic. Congratulations, you’re on your way.

However, portfolio number two, we’re low volatility. We’re at less risk. We only made 30% this year. We’re now left with $1.3 million, not quite as fun. However, less risk. There’ll be less reward, higher risk, higher reward. So the risk is still there. Portfolio number one, second year suffers a 40% loss, dropping their balance down to $960,000. We’re in a low volatility position over here. We only lose 10%. We’re down to $1,170,000. In both scenarios, we average 20%, 60 and negative 40, 20%, 30, negative 10, 20%. So how come when we average 20% here, there is a portfolio difference of $210,000. This is why, especially as you get closer to retirement, we want to make sure that we lessen the volatility to give you a higher probability of success in your retirement years. I want to go over a couple of quick slides with you. Alright. Portfolio number one, you can see down at the bottom, the average return 7.89%.

This is through 22 years of retirement. You have a million bucks. You’re spending 5%, $50,000 per year. We funnel all the way down. After 22 years of retirement, your million dollars is now $330,000. And let’s shift to portfolio number two. Same scenario. In a low volatility environment, a low volatility portfolio, over 22 years, spending $50,000 a year, we’re left with $805,000. So look at the difference. We have less of a return in portfolio number two, our average is lower, but our success is higher. So it’s not always about what your average rate of return is. We want to make sure that we’re positioning your portfolio for success over the duration of your retirement. We want to focus on having more money at the end of your life than having more life at the end of your money. Folks, if you want to see what a low volatility portfolio looks like for you, reach out to us. We’d love to sit down and go over our plan on purpose and set this up for you folks. Have a wonderful day.

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