Many people have moved into their 90s and a few people going into their 100s is becoming common. Though many of us are in a denial mode, somewhere it is lurking in our minds that we could live too long. Too damn long. 120 or thereabouts!! This will mean a life time of 70 years in retirement / semi retirement.
Living long is celebrated – good lifestyle choices, good medicines, good food,…etc. etc. However the downside of living so long is that you are bound to run out of friends, energy and money!! On this blog we will see what to do about the money part.
How should you tweak your portfolio?
1. You MUST buy an annuity when you are 65, 72 and say 80 years of age. Why 3 annuities? to take care of inflation. Why annuity? to counter longevity – so it should be 5 years certain and for the rest of your life and your spouse’s life. Many of today’s half balked financial planners are dismissive about fixed return products. These guys have no clue about portfolio design
2. Stay in a new flat (buy it when you are 60) and be willing to do a reverse mortgage at your age of 74 – assuming your spouse is 70.
3. Learn about equity investing (you can and will move from an equity portfolio to a managed fund portfolio to an index fund as your age increases). However you will NOT move to a zero equity portfolio – at least not till you are in your nineties. If you are 65 years of age YOU CANNOT afford to be purely in debt instruments.
4. Do all investments along with your spouse – form filling, investing online, equity trading online – whatever make sure that she knows how to switch, give certificates from the bank on an annual basis “I am alive” certificates as I call them. And in return help her for cutting vegetables and doing odd jobs in the kitchen.
5. Adjust your withdrawal from your portfolio: many people go with a “one size fits all” kind of a portfolio. You will have to be flexible with your withdrawals. Look at the American economy – the interest rates ar kept artificially very low. So if your debt funds are NOT GENERATING enough returns your drawdown from the equity funds will have to be larger. Simple to say, but very difficult in a volatile market.
5 is nice to start with….
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