Our Best Investment Portfolio Examples for Savers and Retirees

April 28, 2023 GeneAka Investment Comments Off

Investment Portfolio Examples for Retirees

Benz's Bucket Portfolios for retirees include a built-in stabilizer for turbulent times–cash reserves that retirees can draw upon when yields are insufficient to meet living expenses and it's not a good time to disturb stocks. The goal of having buffers like these is in no small part peace of mind. A retiree shouldn't be overly rattled during periods of short-term market turbulence because near-term spending will be relatively undisturbed, and the rest of the investment portfolio can recover when the market eventually does.

To construct a retirement Bucket portfolio, the retiree starts with anticipated income needs for a given year, then subtracts certain sources of income like Social Security and a pension. What's left over is the amount of cash flow that the portfolio will need to supply each year (in other words, the desired withdrawal amount, including income, capital gains, and outright withdrawals).

Anywhere from six months' to two years' worth of living expenses–not covered by Social Security–are housed in cash instruments (Bucket 1), and another 8-10 years' worth of living expenses are housed in bonds (Bucket 2). The remainder of the portfolio is invested in stocks and a high-risk bond fund. Income and rebalancing proceeds from Buckets 2 and 3 are used to replenish Bucket 1 as it becomes depleted.

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These investment portfolio examples include aggressive, moderate, and conservative portfolio options to align with a retiree's level of risk tolerance.

A retiree can build the right portfolio for them by customizing their allocations based on their own expected portfolio withdrawals.

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