Preserve $750k in 401(k) at 67: retirement plan advice
As a 67-year-old retiree, you are facing the daunting task of deciding how to invest the $750,000 in your 401(k) while being conscious of fees. It is essential to preserve this money for the rest of your life without sacrificing financial security and potential growth opportunities. To further complicate matters, you have not yet started taking Social Security benefits, adding to the complexity of your retirement planning.
Before delving into investment options, it is crucial to assess your personal situation and goals for retirement. Are there other assets, such as brokerage accounts or IRAs, that can provide additional income streams? By gaining a deeper understanding of your financial landscape, you can make more informed decisions about how to allocate and preserve your retirement funds.
In addition to asset allocation, consider asset location within your 401(k) plan. Evaluating withdrawal options, such as partial withdrawals, rolling over into an IRA, or converting to a Roth IRA, can help you mitigate fees and access a wider range of investment options. Leaving your assets in the 401(k) may offer institutional pricing and lower-cost investment options. However, moving your assets to an IRA can provide better flexibility and access to a broader range of investment choices while avoiding administrative fees.
When it comes to managing risk in your retirement portfolio, balancing longevity risk and investment risk is crucial. Longevity risk, the risk of outliving your money, can be mitigated by allocating a portion of your portfolio to equities for long-term growth. Meanwhile, investment risk can be managed by including fixed-income investments that provide relative safety and stability.
Diversification within equities and fixed income can further reduce the impact of other types of risk, such as interest rate risk and market risk. Utilizing pooled investment vehicles, such as mutual funds and exchange-traded funds (ETFs), can offer broad market exposure while minimizing individual security risk.
Ultimately, there is no one-size-fits-all approach to investing and preserving retirement funds. Each strategy should be tailored to your unique situation and goals. To navigate this complex landscape, consider consulting a financial advisor who can provide personalized guidance and help you achieve your financial goals in retirement.
If you need further assistance with your retirement plan, consider reaching out to a qualified financial advisor who can provide expert advice based on your individual circumstances. By understanding your personal risk tolerance and financial objectives, you can make informed decisions to preserve and grow your retirement savings for the long term.
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Loraine Montanye, CFP®, AIF® is a SmartAsset financial planning columnist who answers reader questions on personal finance topics. Got a question you’d like answered? Email [email protected], and your question may be featured in a future column.
