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Freedom for Retirement™ is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the Freedom for Retirement Podcast.
If you're a high-earning professional, business owner, or someone approaching retirement
and wondering whether you are truly on track, you are in the right place.
This podcast is all about helping you make smart, confident financial decisions without
the fear, confusion, or sales pressure that so often comes with money advice.
Each episode is designed to break down complex topics like retirement planning, investing,
taxes, and cash flow in plain English.
So you can understand what really matters and avoid the most common and costly financial
mistakes.
Everything you hear here is educational, fiduciary focused, and grounded in real-world
planning experience working with clients just like you.
I'm your host, Josh Duncan, partner at F5 Financial Planning.
Let's get started.
Stop letting your age dictate your portfolio.
The older you get, the more conservative you should become.
Own more bonds, reduce volatility, protect what you have.
That advice has been repeated for so long that a lot of people treat it like common sense.
It may sound wise and responsible, but I think that idea causes a lot of investors to
focus on the wrong problem.
I'm Josh Duncan, partnered F5 Financial Planning, where we take a fiduciary approach to
maximizing our clients' wealth.
In this video, I want to challenge one of the most common assumptions in retirement
planning.
Your portfolio should not be built mainly around your age.
It should be built around what your money needs to do.
So, is your portfolio strong enough to support the future you want?
The first problem with age-based investing advice is that it turns a planning decision
into a shortcut.
If you're in your 30s, own mostly stocks.
If you're in your 50s, you should be adding more bonds.
If you're retired, own even less stock and increase the bonds.
That kind of advice spreads because it's sold as reducing the likelihood of losing all
your money.
But that is driving fear into investors.
Two people can be the exact same age and have different needs from their portfolios.
Picture two retirees, both 67.
One has strong financial Social Security income, a pension, modest spending, and more
assets than they are likely to use.
Their portfolio is helpful, but it's not carrying the full weight of the retirement plan.
The other retiree is also 67, but has no pension, higher spending, and a much greater
dependence on portfolio growth to support retirement over the next two or three decades.
Those two people are not in the same position, even though the calendar says they are.
Age tells you something, but not enough.
It does not tell you how much income is guaranteed.
It does not tell you how flexible your spending is.
It does not tell you whether you want to spend aggressively, leave a legacy.
Fund charitable giving or support family.
It does not tell you how long your money needs to work, and it certainly does not tell you
whether your current allocation gives you the best chance of meeting those goals.
That is why I do not think age should drive the conversation.
Age can be one input, but it should not be the headline.
The headline should be purpose.
What is the money supposed to do?
Is it meant to support a lifestyle for 30 years?
Is it meant to provide optionality?
Or
Preserve a cushion for health care, long-term care, or family needs later in life?
Is it meant to keep pace with inflation while also funding income?
Those are the questions that matter.
A portfolio is a tool and tools should be chosen based on the job, not based on a rule of
thumb.
That is where a lot of investors get led in the wrong direction.
They inherit a formula instead of building a plan.
The second problem is how people define risk.
Most investors have been trained to think risk means volatility.
If the market drops and your account balance swings around, that is risk.
Volatility is real and it's not fun, but volatility is not the same thing as retirement
failure.
A temporary decline in your portfolio is uncomfortable.
That does not automatically mean the plan is broken.
The bigger question is whether your money can still do its job.
The real definition of risk is not achieving your goals.
If your portfolio gets so
cautious that it's no longer grows enough to support your goals, then what exactly did you
protect?
You may have reduced the emotional discomfort of watching the market move around, but you
have physical discomfort if you outlive your money.
This is where a lot of retirees get into trouble.
They focus on the visible short-term risk and ignore the long-term quiet one.
The visible short-term risk is volatility.
You can see it on the screen, it gets talked about on television, it feels urgent.
The quiet long-term risk is inflation.
It's a retirement that lasts longer than expected.
The quiet risk is a portfolio that feels safe because it moves less, but slowly falls
behind what retirement actually requires.
That kind of failure does not happen in one dramatic moment, happens gradually.
That is what makes it dangerous.
No one panics when they are falling behind by a little bit, but over 10, 15, or 20 years,
a little bit.
Can become a very big problem.
So when someone says, you are older now, so you need less risk, I think the immediate
follow-up question should be: which risk are we talking about?
Let's talk about what playing it safe can really cost.
If someone retires in their early 60s, there's a very real chance their money needs to
work for 30 years.
That's not a short runway, that's a long-term investment horizon.
Whether people like that language or not.
And over a period like that, inflation matters a lot.
You do not need extreme inflation for this to become a problem.
You just need steady price increases over a long enough stretch.
Groceries, insurance, healthcare all cost more.
So if your portfolio becomes too timid too early, you can create a mismatch between what
your money is earning and what your life is costing.
Now, I understand why people become more cautious as retirement approaches.
They
Do not want to retire immediately and see the market drop.
Sequence of returns risk is real.
Losses early in retirement matter more than losses later, but that does not mean the
solution is to squeeze growth out of the portfolio and hope caution wins.
It usually means the plan needs to be more thoughtful.
One way we like to approach this problem is to keep two to three years of cash set aside
to withdraw from in the event of a large market drop early in retirement.
Retirement planning is not about building a portfolio that never makes you uncomfortable.
It's about building a plan that gives you a strong chance of supporting your life as long
as you need to.
So, if age should not dictate the portfolio, what should?
Start with cash flow.
How much spending needs to come from the portfolio, and how much is already covered by
Social Security, pensions, rental income, or other reliable sources?
A household with a strong guaranteed income has a very different set of choices.
Than one relying heavily on investments.
Then look at flexibility.
If markets are down, can spending be adjusted?
Can travel be paused?
Can gifting be reduced?
Can large purchases wait?
Flexibility changes how much pressure the portfolio is under.
Then look at time horizon.
Not just life expectancy, but the actual role the money needs to play over time.
Are you trying to support one spouse for decades if the other passes first?
Or are you trying to preserve buying power for long-term retirement?
Maybe you're trying to leave assets to children, grandchildren, or charities.
Then look at taxes.
The order of withdrawals matters.
The type of accounts you spend from matters.
The way income is created matters.
A portfolio should be part of a coordinated strategy, not a standalone pie chart.
Then look at portfolio drift.
This is one of the biggest practical issues people overlook.
A portfolio
That was appropriate three years ago may not be appropriate today.
Not because you had a birthday, but because market movement changed the mix.
One part of the portfolio may have grown much faster than another.
What started as a balanced allocation may no longer be balanced.
That is why rebalancing matters.
That is the kind of review I think investors need more of.
Not, I turned 65, so I guess I need more bonds.
Instead, has my portfolio drifted?
Is it still aligned?
Does it still support the plan we are trying to execute?
That is a much more intelligent way to think about risk.
Here's the question I want viewers to take away from this video.
Stop asking whether your portfolio is conservative enough for your age.
Start asking whether it is designed well enough for your future.
That shift changes everything.
It moves you away from rules of thumb and toward actual planning.
It moves you away from fear-based decisions and toward purposeful decisions.
That does not mean your portfolio should never change.
Of course, it might need to change if your goals change, spending or income sources
change.
Your portfolio may need to change, but those are decisions driven by circumstances and
purpose, not by the fact that another birthday showed up on the calendar.
Build your portfolio around the life you are trying to fund instead of around advice that
sounds sensible but may not fit.
That is what good planning does.
It connects the portfolio to the mission.
So let's bring this together.
Age is easy to measure, but it's not enough to build a sound portfolio.
The real issue is not whether your investments match your stage of life on paper.
The real issue is whether they are aligned with your goals, your income needs, your
flexibility, your time horizon, and the very real challenge of inflation over a long
retirement.
That's why I think investors should stop letting age dictate their portfolio.
A good retirement plan does not focus only on reducing volatility.
It focuses on giving your money the best chance to support your life.
Maintain purchasing power, and avoid the risk that matters most, which is failing to
accomplish what the money is there to do.
So if you're reviewing your portfolio right now, ask, is this portfolio still aligned with
the plan or has it drifted away from what I actually need?
The question will take you much farther.
If you found this episode helpful, please consider subscribing to the podcast and leaving
a review.
It helps more people find the show and continue learning how to make smarter financial
decisions.
I'm Josh Duncan, partnered F5 Financial Planning.
If you would like to learn more about how we help our clients achieve financial freedom
for personal significance, please visit our website at www.f5fp.com.
Thanks for listening, and I'll see you in the next episode.