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Simple strategies for investing in retirement.

Enjoying life without the constraints of a full-time job is everything you’d thought it would be. You likely have more time to experience each day on your terms. But before you start planning your next international cruise or splurging on an expensive hobby, another topic needs attention — your investment portfolio. Ensuring your retirement savings doesn’t dwindle too fast is crucial since today’s typical 65-year-old lives until at least age 90.1

Protecting your savings starts by accepting that you may need to adjust your investment strategy before and after you enter life’s second act. Sam Toigo, senior financial planning analyst at Commerce Trust, recommends developing a plan that aligns with your personal and financial goals. Here are five strategies that could help you do just that.

  1. Reduce risk, not growth potential. For retirement funds to last 25+ years, they must do more than keep pace with inflation. Restructure your portfolio so that growth doesn’t come to a grinding halt the closer you get to retirement.

    For example, instead of ditching stocks altogether in favor of low-risk, low-return investments, a portion could be allocated to diversified growth-oriented investments, providing a balance that combats inflation while supporting your financial needs for decades.

    Toigo reminds retirees that there is no “one-size-fits-all” asset allocation. “Determining a mix that works best to achieve your goals is key to attaining financial security,” he says.

  2. Be the boss of your money. Large, sporadic post-retirement account withdrawals could prematurely deplete your savings nest egg. Instead, pay yourself a set amount every two weeks or once a month from your investment accounts. This steady flow of income ensures you have money to cover living expenses.

    Plus, a regular system of automatic transfers to your checking account could ensure you meet the minimum distribution requirements of specific investments.

  3. Create a personalized pension plan. Few employers still offer worker pension plans, but that doesn’t mean you can’t create your own with the help of an insurance company. Income annuities work much the same as pension plans because they allow you to invest a lump sum upfront for a guaranteed monthly income stream for a set period.

    Adding an income annuity to your pre- or post-retirement investment strategy might prove highly profitable since the payout could continue after you’ve recouped your initial investment.

    For example, if you invest $100,000 in an income annuity, the insurance company may pay you $500 monthly for the rest of your life, providing financial stability and peace of mind in your retirement years.

  4. Increase your interest income. Instead of letting retirement account distributions and Social Security benefit disbursements build up in a regular savings account, invest the money in higher interest rate Certificates of Deposit (CDs). This savings option lets you earn a guaranteed fixed interest rate based on the term length. Money can stay in the CD for a few months or several years. With low minimum deposits, CDs offer a safe, predictable growth over a set period.

  5. Delay Social Security retirement benefits. While Social Security benefits are not considered investments, the money could relieve financial stress caused by a lackluster retirement savings balance. Technically, you can apply for Social Security benefits as early as age 62. But applying before you reach full retirement age (66 or 67 for most people), results in a lower benefit amount.

    If you can wait a few years after full retirement age to request benefits, you could put even more cash in your bank account. You can increase your annual benefit by 8% each year you delay benefits after full retirement age. The incremental boost will stop once you reach 70 years of age.

Changing your investment strategy could provide sustained financial stability throughout your golden years. Meet with a Commerce Trust Specialist to create a personalized investment plan today!

Disclosures:

The opinions and other information in the commentary are provided as of January 24, 2024. This summary is intended to provide general information only and may be of value to the reader and audience.

This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such.

Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Commerce Trust is a division of Commerce Bank.

Investment Products: Not FDIC Insured / May Lose Value / No Bank Guarantee

1 Retirement Information for Medicare Beneficiaries. Social Security Administration, 2023. www.ssa.gov/planners/lifeexpectancy.htm.