Thinking about retirement?  Take a look at the various sources of income available to you, and work on developing a good estimate of your expenses. Use these strategies to make your savings last over the long haul.  

Income sources.  Having diversified sources of income in retirement is a plus.   Types of income can include social security, traditional retirement savings accounts like IRAs and Roth IRAs, employer sponsored plans such as a 401k or 403B, and some individuals are fortunate to receive a company pension.  Owning different types of retirement assets will give you more flexibility when it comes to managing your income stream, and handling the tax liabilities associated with this income.

Expenses. A key part of a retirement plan involves having a good handle on your level of expenses.  Spending requirements during retirement can be thought of in three phases. During the initial phase, or first third of retirement, individuals will typically see expenses rise.  Retirees may begin to travel more or perhaps buy a second home. In the second phase, expenses become more consistent and may drop slightly as individuals have a better sense of their annual needs and expenditures become more regular.  In the third phase, discretionary types of expenses might decrease, but overall costs will likely rise due to an increase in health care costs.

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Diversification is most important.  The most important priority is to protect the nest egg by diversifying the assets.  Spread out these investments so that if any one company or security type sustains a big loss, it will not be devastating to the overall portfolio. Diversification is not only applicable to the investments, but also to the types of accounts owned.  Different types of accounts such as taxable, tax-sheltered and Roths, will provide retirees flexibility by generating different types of income carrying different tax liabilities.

Don’t be excessively conservative. With current life expectancy, a retiree cannot afford to be too conservative with investments or move a large amount of holdings into cash.  Cash should be on hand only for immediate needs. The portfolio still needs to be growth focused to manage the longevity risk and inflation risk.  This means a retiree should still have an adequate amount of investments in stocks to provide enough growth so that savings will last over their lifetime.  Diversification is what provides the safety.

Choose the best account for each asset type.  When equity assets are held in a taxable account, the dividend income is taxed at the long term capital gains rate of 20% or less.  Everything held in a tax-sheltered account is taxed at ordinary income tax rates when it is withdrawn, so you give up the advantage of the lower rate on capital gains. In addition interest payments on bond investments are taxed at the higher ordinary income tax rate.   For this reason, it makes sense to dedicate as much of your equity investments, up to your allocation target, in the taxable accounts, and hold bond investments in the tax-sheltered accounts.

Another reason to favor equities in taxable accounts is because assets in taxable accounts will receive a step up in cost basis at the owner’s death.  When heirs inherit these assets, the cost basis on the stock will be stepped up to the current price of the stock at the date of death; therefore the capital gains tax that would be due on any appreciation, up to that point, is forgiven.  This can be significant after a lifetime of owning stocks.

Politics and investing don’t mix.  Don’t let market sentiment get in the way of a long term financial plan.  Many investors ran from the market ahead of the 2016 elections only to see market returns increase counter to common expectation.  Trying to time the market most often backfires. Stick to the investment plan that is in place.

Valuation matters.  Be wary of chasing “hot” stocks or following the crowd. It’s natural that investors are drawn to what is working at the moment. However these popular investments are likely expensive because of investor demand.  Likewise, when the market is shunning certain stocks or industries the stock prices are beaten down. Perhaps this is a time to consider investing. The price you pay for an asset is as important as what you buy.

Note:  Donna St.Amant, MBA, is a Portfolio Manager at Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Ave., Summit.

For over 25 years, Point View Wealth Management, Inc. has been working with families in Summit and beyond, providing customized portfolio management services and comprehensive financial planning, to develop and achieve their financial goals.  Visit our website at, or call us at  908-598-1717 to learn more about Point View Wealth Management, Inc.  and how we can help you and your family meet your financial objectives. To sign up for our commentaries and newsletter, or come in for a complementary introductory meeting, e-mail us at

CNBC has named Point View one of the Top 100 fee-only wealth managers in America.