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Blog | The Portfolio Doctor

The Portfolio Doctor

My blog provides valuable insights into Nobel Prize-winning financial strategies for investors. By utilizing decades of worldwide peer-reviewed capital markets research and analysis, I demonstrate how to build better investment portfolios with lower risks. I also examine common financial media misinformation and how investors can make better financial decisions.

Overcome the Fear of Outliving Your Money

Running out of money is the top retirement fear of working Americans, according to 2015 research by the Transamerica Center for Retirement Studies. That should come as no surprise, given American’s low level of retirement savings and the fact that many of us are living long lives once we reach 65.

If you are worried about making your savings last for as long as you need them, you can take steps now to improve your financial standing for an extended retirement and a long life. These steps include maximizing opportunities for tax-deferred savings through workplace retirement plans and putting the power of compound interest to work by investing as soon as possible.

But even with all of the opportunities available to enhance your retirement readiness, you’ll still come across obstacles that can make achieving your retirement goals difficult. This is where you can call on the guidance of a skilled financial advisor.

The Quandary: One source of retirement income won’t be enough.

If you’re looking to enjoy a certain lifestyle during retirement, it’s likely you will need multiple sources of income. Relying solely on Social Security will not be enough. Just consider the average monthly Social Security check in 2015 was $1,225, according to the Social Security Administration. That’s just over $14,700 per year.

So investments, workplace retirement accounts, housing and inheritances will also come into play when tapping sources for retirement income. Choosing which assets and accounts to tap first, and which ones you should try to preserve, is the next obstacle you’ll face. Your decision can impact how much you pay in taxes and what you may be able to pass along to a spouse or other family members after you pass away.

The Challenge: Higher yields come with greater risks.

If you’re a conservative investor, you know well what’s happening with interest rates: they’ve been on a downtrend for many years. Even with the prospect of Federal Reserve rate hikes, longer-term yields on bonds and savings accounts haven’t risen all that much.

This long spell of low interest rates has crunched conservative investors, many of whom typically look to low-risk savings accounts and bonds as a relatively safe place to earn income. The yields available in these low-risk savings accounts haven’t offered much to income-seeking investors. Many have ventured into riskier parts of the bond market and took on more risk in pursuit of higher yields.

Some options to consider.

Look beyond bonds for income. One option you can consider is to adopt a total return strategy, rather than seeking income. Adding an allocation to dividend-paying stocks offers a way to diversify a total return portfolio. But keep in mind these stocks have historically had a close relationship with interest rate changes—prices for dividend stocks fall when rates rise, as investors are attracted to the higher yields available in relatively less risky bonds.

Another option to consider is to withdraw assets when you rebalance your portfolio. Instead of exchanging investments to return to your target allocation, you could instead sell assets that have appreciated and return that allocation back to its target level. These appreciated assets will often be stocks and equity holdings, so reducing this allocation can also help you keep your exposure to risk in check.

Before you make any move, talk with a financial advisor to assess your goals and consider your options. Contact Timothy Bock at This email address is being protected from spambots. You need JavaScript enabled to view it. to schedule a retirement plan review and learn about strategies that reduce the worry about outliving your assets.


Transamerica Center for Retirement Studies, 16th Annual Transamerica Retirement Survey. August 2015. https://www.transamericacenter.org/docs/default-source/resources/center-research/16th-annual/tcrs2015_sr_16th_compendium_of_workers.pdf
"Median retirement account balance drops of $2,500.” Benefits Pro, March 21, 2015. http://www.benefitspro.com/2015/03/12/median-retirement-account-balance-drops-to-2500
National Center for Health Statistics. NCHS Data Brief, No. 229. December 2015. http://www.cdc.gov/nchs/data/databriefs/db229.pdf
Social Security Administration, Monthly Statistical Snapshot, October 2015. https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/#table2

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