Why Your Retirement Portfolio Must Always Evolve, Ep #128

When I help a client craft a retirement plan, we want to make sure it lasts at least 30 years, (based on average life expectancy). A lot can change over a 30-year time period, right? So in this episode of the Retirement Made Easy podcast, I share why you can’t embrace the “set it and forget it” mentality and tell you why your retirement portfolio must change and adapt with your changing needs and goals.

You will want to hear this episode if you are interested in…

• [0:28] What makes you more likely to achieve goals?
• [5:55] Check out RetirementMadeEasyPodcast.com!
• [6:53] Why you can’t apply “set it and forget it” to investing
• [10:07] Don’t forget the purpose of investment account(s)
• [12:46] You must adapt because change is inevitable

Why you can’t apply “set it and forget it” to investing

Years ago, my mom bought a rotisserie cooker. The brand’s catchphrase was “Just set it and forget it.” That’s not how it works for retirement planning. You can’t “set it and forget it” with your investment portfolio. Why?

Because it needs to last 30+ years of retirement. In 30 years, there will be tax law changes. Interest raises will rise. Your income needs may change. You may need to withdraw more (or less). As you get older, your risk tolerance may be lower.

How you design your portfolio largely depends on your goals for retirement. Those will likely change as you get older. So how you invest your portfolio will need to adjust based on your changing needs.

Don’t forget the purpose of investment account(s)

The purpose of a retirement account is to leave behind a legacy for children or loved ones or, it’s to help fund your retirement years. Usually, it’s a combination of both.

If you want to travel in the first 10 years of retirement, you’ll need more income in those years. Your portfolio will need to focus on producing an income. When you’re 82, you might not plan on traveling as much. Your travel budget may be next to nothing. Your needs and desires constantly change over your lifetime. So you will need to make changes to how your retirement portfolio is invested.

You can’t buy a car and never change the oil, rotate the tires, or replace the brakes. Maintenance must be done to care for your car. Once you retire, the work is not done. Changes will need to be made as your lifestyle changes. You must adapt and pivot.

You must adapt because change is inevitable

If you inherited an IRA before 1/1/2020, you were required to take distributions out on an annual basis for the rest of your life. The law changed with The Secure Act. Now, when you inherit an IRA, you have 10 years to withdraw all of the money from the IRA and pay the taxes on that money. This was a monumental change. There will always be new laws and changes to social security thrown our way.

Have you ever walked into a completely outdated home? Maybe the carpet is dank, the appliances are outdated, and the bathrooms need to be gutted. If you feel like you’re walking back 30–40 years in time, you might lose interest in buying that home. You’ll have to spend thousands of dollars to make the updates.

If improvements haven’t been made to the home, it becomes less valuable. Secondly, it makes you question if the home is being maintained properly. What else is outdated that isn’t visible to the naked eye?

It’s the same with your investment portfolio. You need to adapt and make changes as your needs change. And every adjustment that is made solely depends on you and your goals. Remember, there is no cookie-cutter approach to investing for retirement.

Resources & People Mentioned

• 3 Steps to Retirement Planning
• The Retirement Story Everyone NEEDS to Hear