I’m 56 and a DIY investor considering retiring at the end of the year. My wife is 10 years younger and plans to work for another four years. Should I treat our investment portfolios separately based on our respective ages, or holistically as one?
We asked Jillian Bryan, senior portfolio manager and senior investment adviser at TD Wealth Private Investment Advice, to answer this one.
You might not be retiring at the same time but it’s still best to treat yourself and your partner as one unit.
Ms. Bryan advised that you view the portfolio as one integrated household plan, not two separate accounts. “From a financial planning standpoint, your family’s resources, expenses and goals are shared, so the investment strategy should reflect your combined needs and risk capacity.”
Ms. Bryan also noted that even though your wife is younger and still earning money, the total portfolio should be optimized around your joint objectives, such as funding your retirement spending, maintaining your lifestyle and preserving capital for both your retirements.
“That said, your respective accounts can be structured differently for tax efficiency and flexibility,” Ms. Bryan said, adding this is where professional advice adds value.
That advice might include holding “more income-generating or lower-volatility investments in your registered or non-registered accounts that will support near-term withdrawals” while your wife’s accounts could remain focused on growth because she’s still earning, Ms. Bryan said.
Part of the role of an adviser, she said, is to help make joint life expectancy, tax brackets and income streams work together, in one cohesive structure.
“We consistently see new clients transferring in their portfolio, which works well when the market is up but there is no plan should the market decline to protect the portfolio,” said Ms. Bryan. “Therefore, a majority of our investors find that a balanced approach leads to a greater sense of comfort.”
It’s also important to define what “enough” looks like for retirement and your legacy plan, whether that’s creating a financial safety net for your grandchildren, helping a friend or leaving a meaningful gift to a charity.
“A portfolio without a purpose is pure volatility – it should be a plan that reflects your values and story,” Ms. Bryan said.
Do you want advice on a financial planning or retirement issue that’s affecting you? Send us an e-mail.