Living in Retirement
"Life happens" in retirement too
March 10, 2014
Amy Chain: Let's talk about retirement for a minute here, Mary. I want to come to you a little bit.
We got a question from Carrie in Cayucos, California, potentially—maybe I'm saying that right. But Carrie in California, has asked us about whether or not in retirement, "Is it smarter to stay with a mix of stocks and bonds or switch to bonds alone? I am more interested in not losing the money that I have rather than making money. So we've talked about having a plan. Now here we are at retirement. What might we want to think about doing?
Mary Ryan: Right, and that's a really good question in the sense that I think we've worked so hard to save our money, and we've planned and we've got it there. "Oh, I don't want to lose it now. What am I going to do?"
And when we look at that question, the fear is, "Well the stock market, I know, goes up and down, and I don't like the down part, so I don't want to have anything in stocks." But there's also inflation risk, that let's say you retire at age 60. We run financial plans for people out to age 100, so you could have another 40 years of living and enjoying and spending, and using this portfolio. And if you're not staying ahead of inflation, it may not be there for you at the end, so we still have to look long term.
And, and as I like to say, just because you retire doesn't mean you cash it all in, shove it in your pockets, and walk out the door. You need to make sure that you are thinking ahead and having some in stock—and everybody's situation's different and you need to think about your risk tolerance—but remember that you need to have some growth. It's very important to still have some growth, even if you have retired.
Amy Chain: Chuck, anything to add?
Chuck Riley: No, I think that that's exactly right. When I talk to clients and they think that retirement is kind of a cliff. It's like "I've reached there. I'm good to go, so what do I do next?" And they aren't aware that inflation is kind of a hidden cost that you end up paying. You don't necessarily see it in your portfolio; you don't see that money being eroded, but it certainly does over time.
Mary Ryan: But you see it at the grocery store, you see it in your utility bills. It's out there.
Chuck Riley: It is.
Mary Ryan: And your dollars may not be going down, but that buying power is really getting eroded.
Chuck Riley: Right. I think the only place we see inflation that's apparent is like at the gas pump, right? That's where we kind of see it.
Mary Ryan: That's really it, yeah.
Chuck Riley: That's really where we see it, and that's where it's most obvious.
All investing is subject to risk, including the possible loss of the money you invest.
Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor.
This webcast is for educational purposes only. We recommend that you consult a financial or tax advisor about your individual situation.
© 2014 The Vanguard Group, Inc. All rights reserved.
Financial planning doesn't stop when you retire
Getting to retirement is one thing, but how do you get through it with enough money to last … a lifetime? Mary Ryan of Vanguard Asset Management Services™ and Chuck Riley from Vanguard Advice Services™ say a balanced portfolio of stocks and bonds is still a necessary consideration during your retirement years, especially as a hedge against inflation.
Other excerpts from this webcast:
- All investing is subject to risk, including the possible loss of the money you invest.
- Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.
- Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor.
- This webcast is for educational purposes only. We recommend that you consult a financial or tax advisor about your individual situation.