Top 5 investment strategies for a stress-free retirement

Planning for retirement can be stressful, but having the right investment strategy in place helps ensure your nest egg lasts. As a top financial advisory firm, Fisher Capital Group in Beverly Hills recommends considering these five investment approaches for a worry-free retirement.

  1. Target date funds

Target date funds take the guesswork out of investing for retirement. These mutual funds automatically adjust their asset allocation between stocks, bonds, and cash equivalents based on your selected retirement year. The fund becomes more conservative over time, with a higher percentage of bonds and cash, to preserve capital as you near retirement. With target date funds, you simply pick the fund with your estimated retirement date and let the fund manager handle the rest. This “set it and forget it” approach helps remove emotion from investing decisions. Fisher Capital Beverly Hills notes target date funds have become a staple offering in many 401(k) plans due to their simplicity.

  1. Build a bond ladder 

Bonds provide stable income streams with relatively low risk, making them a cornerstone of many retirement portfolios. Bond ladders involve purchasing individual bonds that mature in successive years, providing steady payouts you use to supplement other income in retirement. For example, you might buy bonds maturing in the years 2025, 2030, 2035, and so on. As each bond matures, you take its payout and reinvest in a new long-term bond to keep the ladder going. Fisher Capital Group says this provides predictable cash flow without having to sell assets. Maintaining a bond ladder ensures you always have bonds nearing maturity while minimizing reinvestment risk.

  1. Utilize dividend stocks 

While they do carry a higher risk than bonds, dividend stocks that regularly distribute profits to shareholders provide retirement income that – unlike bonds – has the potential to grow over time. Investing in dividend aristocrats, or S&P 500 companies that have increased their dividends for 25+ consecutive years, provides both solid income and inflation protection. fisher capital notes focusing on companies with strong underlying fundamentals provides rising income streams to offset retirement costs. This removes the need to sell assets to generate supplemental cash flow. Leading dividend sectors include healthcare, consumer staples, utilities, and telecom.

  1. Apply the 4% rule

The 4% rule helps determine optimal withdrawal rates in retirement. To follow this rule of thumb, at the start of retirement you withdraw 4% of your nest egg, then adjust subsequent amounts for inflation. So if you have $1 million saved, you would withdraw $40,000 the first year. Studies show that this conservative drawdown strategy allows 25- to 30-year retirements without depleting the portfolio. Fisher Capital Group notes applying the 4% rule, along with maintaining a balanced portfolio, provides peace of mind that savings will last throughout retirement. It also eliminates emotions and guesswork from annual withdrawal decisions.

  1. Consider annuities to cover essentials

While they are not for everyone or your entire portfolio, Fisher Capital Beverly Hills notes that annuities deserve consideration in many retirement plans. Annuities are insurance contracts that provide guaranteed income for life in retirement. They cover basics like housing, food, transportation, and healthcare, allowing other assets to be invested more aggressively for growth.   Immediate annuities provide bigger payouts, while deferred annuities allow assets to accumulate tax-deferred before converting them into lifetime income streams. Utilizing annuities to cover retirement essentials allows you to take more risk – and reap more reward – with the remainder of your portfolio.