The Most Important Portfolio Management Tips for Pre-Retirees

The Most Important Portfolio Management Tips for Pre-Retirees

16 Dec 2021

The years and months leading up to your retirement are particularly important as the stage is set for a graceful transition to your golden years.  Make investing mistakes in this period of time and you might end up spending another year or two in the workforce.  Opt for professional investment management provided by our financial planning team in Canton, OH and you will benefit from our full-cycle investing approach.  This investing philosophy shifts money to securities based on macro economic dynamics as well as your personal financial goals and retirement time horizon.  


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The bottom line is even the most experienced investment advisors cannot predict whether the market will be bearish, bullish, or prove stagnant in the years leading up to your retirement.  Instead of simply setting an asset allocation and hoping everything works out, the best CERTIFIED FINANCIAL PLANNER™ Professionals will diversify portfolios and pivot as necessary.  

You need and deserve a trustworthy fee-only, fiduciary financial advisor willing to monitor the economy and actively manage your portfolio in response.  The overarching goal of full-cycle investing is to help you transition to a comfortable retirement.  

Let’s take a quick look at a few portfolio management tips every pre-retiree should be aware of.

Focus on Your Work Rather Than the Market

It is better for pre-retirees to center their attention on their own work as opposed to the fluctuations of the stock market.  Entrust a proven CERTIFIED FINANCIAL PLANNER™ Professional to follow market conditions on your behalf and you will be liberated to dedicate your energy and time to maximize your employment or business income.  

Your financial advisor will strategically allocate your money in response to the dynamics of the economy with your target retirement date in mind.  This approach is the antithesis of the traditional “set it and forget it” wealth management strategy.  Instead of obsessing over maintaining a balance between risk and reward with an emphasis on equities, you will be better served with a full-cycle investing strategy that isn’t nearly as susceptible to market movement.

Mind Those Taxes

Taxes are still an important consideration in spite of your pending retirement.  Comprehensive financial planning is necessary to ensure you don’t underestimate your tax burden in the years

ahead.  If you suspect you will soon move down to a lower tax bracket, it may be in your interest to maximize contributions that are tax-deductible in the years leading up to your retirement.  

If you are considering moving, you should also be aware that you may have to pay a capital gains tax.  Your fee-only, fiduciary financial advisor can also provide advice pertaining to holding and selling stock.  For example, it might make sense to spread out the sale of shares across several years rather than selling it all at once.

Roth IRA or Traditional IRA?  That is the Question

reviewing portfolio returns

Even if you only have a decade or less remaining in the workforce, it is in your interest to consider whether a traditional IRA or a Roth IRA makes more sense.  The answer to this question depends on your unique financial situation.  You can make after-tax contributions to your Roth IRA, meaning there is no tax break when money is put into the account.  If the prospect of avoiding taxes on distributions when withdrawals are made in retirement doesn’t align with your financial aims, it makes more sense to choose a traditional IRA.  

Though the government will eventually tax you at the point you withdraw money from a traditional IRA, no such penalties are applicable after the age of 59.5.  However, traditional IRAs mandate that the account holder commence withdrawals at the age of 72.  In contrast, Roth IRAs do not force account holders to make withdrawals at 72 or any other age as taxes have already been paid at the time contributions were made.

Reduce Investment Risk

Diversification in terms of risk level and economic sectors is certainly important yet it is not the only way to mitigate risk when preparing for retirement.  You might consider shifting money to savings accounts, CDs, money market accounts, and real estate as you transition toward retirement.  If the prospect of such investment vehicles’ low return rates failing to outpace inflation worries you, you might mitigate risk by moving money out of stocks to ETFs and mutual funds. 

You don’t have to do all the research yourself.  By leaning on a financial advisor for guidance and you may be able to successfully minimize your investment risk in the years leading up to your departure from the workforce.

It Might Make Sense to Refinance Your Mortgage

Refinancing your mortgage during your final years in the workforce might seem counterintuitive as you likely envisioned this to be a time when you finally emerge from debt.  However, the cost of living has soared and salaries have not kept pace with inflation.  There is no shame in refinancing your mortgage prior to retirement.  The logic in attempting to refinance a mortgage when in the final years of work is that the chances of approval are that much higher when employed.  Though there is the potential to be approved for a mortgage refinance in retirement, it can be more challenging.  

Every pre-retiree should be aware that mortgage lenders determine what a borrower can afford with his or her retirement assets in mind.  If your financial nest egg isn’t large, it might be difficult to qualify for a mortgage refinance after exiting the workforce.  Apply for the mortgage refinance while still working and it may be more likely you will be approved at a comparably lower interest rate and save thousands or even tens of thousands of dollars in the years ahead as you continue to establish equity in your home.  

So don’t assume it is financially prudent to pay off the entirety of your mortgage prior to retiring.  If you were to pour most or all of your cash into your home, there might be a massive opportunity cost in the form of missing out on lucrative investing opportunities. 

At McGervey Wealth Management, we get to know you on a personal level and keep things simple, using common language everyone can understand. To learn more about portfolio management for pre-retirees and retirees contact us today.

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More About the Author: E. Michael McGervey, CFP®, CRPC®

Mike is passionate and skilled at helping clients solve complex financial challenges. He’s known for his thoughtful communication, educational approach, and exceptional customized service. Mike has been a sought-after source for financial television, magazines, and newspapers looking for insightful analysis. His expertise has been featured by CNBC, FOX Business and...