Young Woman Providing Care And Support To An Older Woman.Investing in the decade leading up to your retirement requires a different strategy than that employed while in your 20s, 30s and 40s. There is no reason to panic if you are approaching retirement and don’t have a large nest egg. Alter your investing strategy as appropriate and you may make significant headway in your quest to bolster your financial foundation, ultimately setting the stage for an enjoyable retirement.

Shift Toward More Balanced Investments

The days of taking significant risks with your hard-earned money are in your rearview mirror. It may be time to shift more of your money away from high-risk stocks to less aggressive stock portfolios or mutual funds, ETFs, bonds, CDs, and money market accounts. A more conservative approach to investing may help safeguard your nest egg, ensuring you have enough money to retire as the twilight of your career approaches. This is not to say you should shift all your money out of stocks. Rather, this is a time to diversify your money across a number of investment vehicles, many of which should be comprised of comparably low-risk investments.

Review Your Portfolio With a Financial Advisor

If you have 5-10 years to go before retirement, seize the opportunity to analyze your portfolio with the assistance of a financial advisor. In general, between 3% and 5% of your portfolio should constitute enough funds to support you through a year of retirement assuming you may also have money coming in from Social Security.

Meet with a financial advisor to delve into the details of your portfolio, assess your current risk level and determine if you will have enough money to meet your target retirement date. If it appears as though you will come up short, make the appropriate strategic alterations with the assistance of your financial advisor and you might not have to extend your career beyond the age of 70.

Consider the Tax Ramifications

Though you are only a decade or so away from retirement, it may still be in your interest to favor tax-sheltered investment vehicles such as 401(k) and IRA plans. Continue to add money into these accounts, especially if your employer matches your contributions. Furthermore, catch-up contributions to these plans are permitted for those age 50 and older.

If you have maxed out your retirement accounts and you have a high deductible health plan, you may be able to contribute money to a health savings account. This could potentially provide you with tax free withdrawals in retirement to assist in paying some of your out-of-pocket medical expenses. Catch-up contributions to such accounts are available to people age 55 and older. Adding money to such non-retirement accounts boosts flexibility after you start drawing down from traditional accounts when you reach your golden years of retirement.

If you are a high earner, it might be sensible to invest in municipal bonds for fixed income holdings. Municipal bonds may not trigger federal taxes. In some cases, municipal bonds do not trigger local or state taxes. When in doubt, meet with your financial advisor for guidance tailored to your unique financial situation, heed this professional advice and you could be well on your way to enjoying some truly rewarding golden years after a career of hard work.

Opinions expressed are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Some investments mentioned may not be suitable for all investors. Past performance is not a guarantee of future results. Investing involves risk and investors may incur a profit or a loss.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Investments in municipal securities may not be appropriate for all investors, particularly those who do not stand to benefit from the tax status of the investment. Municipal bond interest is no subject to federal income tax but may be subject to AMT, state or local taxes. Municipal securities typically provide a lower yield than comparably rated taxable investments in consideration of their tax-advantaged status. Please consult an income tax professional to assess the impact of holding such securities on your tax liability.

Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. There is an inverse relationship between interest rates movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.

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