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Navigating Your Finances at 70: Expert Tips for Safe Growth and Advisor Guidance

February 21, 2025
Smart Money

Planning for a Secure Financial Future: Expert Insights on Investment Strategies for Seniors

As individuals approach retirement age, managing finances becomes increasingly important. A recent inquiry submitted to MarketWatch’s financial advice column, "The Advicer," highlighted these concerns, especially for those nearing the 70-year milestone. A contributor posed questions regarding asset management and the pursuit of safe growth investments, specifically targeting returns between 4% to 5%. The professionals consulted in the piece offered a wealth of knowledge on how seniors can navigate their financial landscape effectively.

Understanding Your Financial Situation

The individual seeking advice has a relatively modest annual income of $25,000 from Social Security, alongside significant financial assets: $310,000 in cash savings, $925,000 invested with an investment banking firm, and $24,000 held in an IRA. With these figures, they pondered whether strategic shifts in investment could enhance their financial security.

Andrew J. Evans, a financial advisor at Rossby Financial, emphasizes the importance of clearly defining personal financial goals before embarking on any potential reallocations. "You really need to discuss what problem the 4% to 5% is solving," he advises. Understanding one’s financial objectives is crucial to making informed decisions that cater to individual lifestyle aspirations.

When to Seek Professional Guidance

Given the complexity of the investment landscape, engaging a financial adviser can provide tailored insights and recommendations. It’s suggested to look for a fee-only fiduciary, such as a Certified Financial Planner (CFP). Certified financial planners are held to strict ethical standards and must prioritize their clients’ interests, potentially reducing conflicts of interest that can arise in financial advisory relationships.

Experts like Bruce Primeau, a CFP and CPA at Avantax, note that the decision to shift funds will heavily depend on one’s risk tolerance and current investment allocations. Those planning to retire should also consider the timeline for drawing from their investments.

Ryan Haiss, a CFP at Flynn Zito Capital Management, cautions that risk assessment is vital. "Without knowing more about your budget, it’s hard to say how much risk you should take," he mentions, underscoring how retirement plans often lead individuals to consolidate accounts for simplified distributions and better alignment with financial goals.

Navigating Potential Risks and Tax Implications

One key consideration for those contemplating moving money from taxable brokerage accounts is the tax implications that can arise from asset sales. Financial planner Alonso Rodriguez Segarra from Advise Financial brings attention to the notion that falling interest rates could affect future earnings if funds are shifted towards fixed-rate investments.

Segarra analogizes financial portfolios to vehicles: “An investment portfolio is like a car that will take you to a popular destination." He suggests that while short-term investments yielding 4% may be viable for immediate needs, a longer-term investment strategy is equally essential to hedge against inflation and sustain growth.

Exploring Investment Options

Among the solutions proposed by financial professionals is the consideration of a Roth IRA conversion, which can have tax advantages under certain circumstances. Financial expert Mark Humphries emphasizes the need to work with a fiduciary who can guide asset allocation, liability review, and estate planning.

Additionally, James Daniel, a CFP at The Advisory Firm, suggests a laddered Treasury Bill strategy as an alternative to realize desired returns without exposing capital to excessive risk. Treasury Bills currently yield competitive rates that can align well with the investment goals set forth by the individual.

Conclusion

As retirement approaches, understanding and managing one’s financial assets effectively may require professional assistance. Seeking tailored advice from a fiduciary adviser can facilitate better asset allocation, solidify a retirement strategy, and ultimately lead to a more secure financial future. If you’re exploring options, consider using resources like SmartAsset, NAPFA, or the CFP Board to connect with certified financial planners who can provide the guidance necessary to meet your goals.

For more inquiries regarding your financial future or concerns about your financial adviser, you can email your questions to [email protected].

About the Author

Alisa Wolfson writes for MarketWatch Picks, specializing in savings, retirement, investing, and other personal finance topics. Her insights aim to assist individuals in navigating the complexities of financial management.