Whether you did it yourself, consulted an advisor, or used your company’s 401(k) online planning tool, you had to answer some basic questions, including: what’s your risk tolerance? 

Do you remember your answer? 

Most of us invest for the long-term. We save to prepare for life’s big-ticket items, such as buying a home, starting a family, paying for college, and securing our retirement. While those priorities aren’t likely to change, our tolerance for risk probably will. 

So, whether you remember your answer or not, it makes sense for you to revisit your risk tolerance and adjust your investments accordingly. But how often should you do that? 

As with most financial questions, there’s no clear-cut answer. However, there are some guidelines to help you make the best choices for your situation. 

What does it mean to balance your portfolio? 

A portfolio’s ratio of stocks to bonds is directly related to risk and reward: the higher the percentage of stocks you hold, the more risk you take on in order to increase your chances for higher returns. Over time, the stock market will probably outperform the yield on bonds, but not without some fluctuations along the way. 

Generally speaking, younger investors are willing to take on more risk. While there’s no standard rule of thumb, a mix of 80% stocks and 20% bonds is aggressive, but not overly so. With time on their side, a younger investor can feel confident that the rewards of stocks outweigh their risks.

But for someone close to retirement, that same 80/20 mix may be too risky. If there’s a downturn in the market, there may not be time to rebound, especially as the investor will be drawing down that portfolio when they retire. In that case, a ratio closer to 60/40 would more closely align with the investor’s risk tolerance. 

Takeaway #1:

It’s logical to assume less risk as you get older. 

But the question remains, how — and when — should you adjust your portfolio? 

Sell high and buy low or play the hot hand? 

Suppose you have a portfolio with 80% stocks and 20% bonds. And let’s say that one of your stocks is doing so well that your ratio is now 85% stocks and 15% bonds. Should you reassess your position? 

If you want to maintain your original ratio — and don’t forget, those aren’t just numbers, they reflect your risk tolerance — the answer is yes. The conventional wisdom on how you do that may surprise you: sell your high performing stock and put that money into bonds to get back to your 80/20 balance. Yes, you read correctly: sell what’s making you money and buy more of what isn’t.

There's a solid rationale behind this strategy. If that one stock represents too much of your portfolio, you’re putting yourself at risk if the price plummets — the “too-many-eggs-in-one-basket” problem. This tactic also forces you to practice the “sell high, buy low” philosophy that many of us agree with but few of us follow. That high-performing stock is going to peak at some point, it’s just a matter of when. 

This is a different way to think about risk and reward. What would make you feel worse: selling a stock that continues to perform well, or holding onto a stock that starts to drop? 

Takeaway #2: 

The gains you make with your investments are literally money in the bank. Focus on that and not on what could have been. 

Practice oversight, not micromanagement 

Like being a good parent or a successful boss, avoid micromanagement when it comes to your investments. Even in the best of times, financial markets fluctuate. Events will occur that you have no control over, from pandemics to political upheavals. Unless your livelihood depends solely on the stock market, don’t pay too much attention to the short-term bumps in the road. 

A smarter approach is to monitor significant changes in your own life. If you win the lottery, you should definitely take a hard look at your asset allocation. The same holds true for more realistic occurrences such as a change in marital status, an unexpected inheritance, or a sudden change in your health. 

You can also take solace in a Vanguard study of stock and bond performance since 1926. While it’s true that stocks historically outperform bonds, allocation shifts don’t make that big of a difference in the long run. For example, a 60% stock/40% bond allocation during that period yielded an 8.6% average annual return, while an 80%/20% split yielded 9.4% — not significant enough to keep you up at night. 

Remember it’s a marathon, not a sprint 

While we all want to get the most from our investments, we’re better off taking the long view. Riding a rollercoaster can be thrilling, but it’s not without cost and it’s certainly not for everyone. 

It’s fine to set up a regular schedule to review your portfolio. Most financial advisors meet with their clients at least annually. You can go over your position, ask questions, and discuss your options. If your portfolio’s balance shifts 5% or more, that’s a signal to take a look at your allocations, but you may or may not decide to do anything about it. 

Don’t worry about quick wins or big payoffs. Instead, enjoy the peace of mind that investing in your future brings.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

For example, the advocacy organization Autism Speaks estimates the lifetime cost of caring for a person with autism at $1.4 million. That cost can almost double if the person is impacted by an intellectual disability (having an IQ under 70). 

Most families don’t have the income or personal savings to meet these challenges. That’s why it’s essential to take advantage of all the government benefits that are available to assist families caring for a loved one with special needs. 

If you are caring for a family member with special needs, make sure your financial planning includes these government programs. 

Supplemental Security Income Benefits 

Supplemental Security Income (SSI) is a federally funded program administered by the Social Security Administration (SSA). 

Blind or disabled children and adults are eligible for SSI benefits, as are adults 65 and older who meet the program’s financial criteria. 

The SSI definition of “disabled” is different for children and adults. 

For children: 

• The child must have a physical or mental condition(s) that very seriously limits his or her activities, and 
• The condition(s) must have lasted, or be expected to last, at least one year or result in death.

For adults: 

• The adult has physical or mental condition(s) that results in the inability to do any substantial gainful activity and can be expected to result in death, or 
• The condition has lasted, or can be expected to last, for a continuous period of 12 months or more. 

Visit the SSI homepage for information on the program and on how to apply. Also, know that the Social Security Administration will: 

• Help you complete your application. 
• Make an appointment and pay for a medical exam if the information you currently have isn’t sufficient. 
• In some cases, pay for your travel to the exam. 

Social Security Disability Insurance 

Social Security Disability Insurance (SSDI) is an earned benefit funded by the Social Security tax fund and targeted to people whose physical or mental impairments prevent them from engaging in their normal occupation or other work. That means, even if an individual meets the SSI definition of disabled, that person must have sufficient Social Security work experience to qualify for payments. 

The program includes the Disabled Adult Child (DAC) provision, under which an adult disabled before age 22 may be eligible for child benefits if a parent is deceased or starts receiving retirement or disability benefits. This is called a “child’s benefit” because it is based on the parent’s Social Security earnings. 

The SSA website provides this example of a DAC benefit: 

A worker starts collecting Social Security retirement benefits at age 62. He has a 38-year-old son who has had cerebral palsy since birth. The son will start collecting a disabled "child's" benefit on his father's Social Security record. 

In this case, the adult child is eligible even though he has not worked or contributed to Social Security. Adult children who work can still receive benefits as long as their earnings remain below a level the SSA considers “substantial,” which in 2020 was set at anything over $1,260 a month. 

Check out the SSA guidelines to learn more about SSDI benefits, eligibility, and application process. 

Get professional support 

The SSI and SSDI benefits are just some of what’s available from the government to assist families with special needs. Medicare and Medicaid include provisions that can provide additional financial assistance. 

Even though the SSA website is easy to navigate, these benefits can be complex and challenging to understand. One of the best ways to ensure your loved one receives all their eligible benefits is to work with an advisor who has professional credentials and experience working in special needs planning. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

If you’ve put saving for retirement on the back burner, here is some good news: It’s never too late to start. And it’s never too early, either. 

There are reasons why retirement planning is a touchy subject. In Northwestern Mutual’s most recent Planning & Progress Study, an annual survey of national attitudes and behaviors about money, they found that 22% of Americans have less than $5,000 in retirement savings, and 15% have no savings at all. That’s actually an improvement from the previous year. 

But this isn’t about guilt trips or alarm bells. This is about starting or improving your retirement strategy so you will be financially set for the long term. 

While strategies will change depending on your situation, retirement planning is all about looking to the future. For that, there’s no better time than the present. 

Why it’s never too late 

If you’re in your 50s and don’t like what you see in your retirement account, consider these course-correcting steps. 

1. Make your 401(k) your savings priority. If your employer offers a 401(k) or 403 (b) plan, participate, or up your participation if you’re already involved. If there’s an employer matching contribution, try to contribute up to that amount. Matching contributions are meant to incentivize savings, so take advantage: It’s free money in your pocket (actually, in your retirement savings account). And because your contributions are pre-tax, you'll see additional benefits when tax season arrives. 
2. Take advantage of the IRS catch-up contribution. Believe it or not, the IRS is on your side, at least when it comes to your retirement. The annual limit for tax-free contributions to 401(k) and similar plans was raised to $19,500, and those over 50 can contribute an additional $6,500, up from $6,000 in 2019. Those 50 and older can also make an extra $1,000 tax-free IRA contribution on top of the $6,000 annual cap. See the IRS website for specific catch-up contribution details. 
3. Consider extending work and delaying Social Security. If you always envisioned retiring at a certain age — say 65 — it may be worth rethinking that. Start positioning yourself now for work you would enjoy doing for a few years after your current job. Retired workers are increasingly valued as consultants and mentors. If that interests you, lay the groundwork now. At the same time, consider delaying taking your Social Security benefits. Every year you delay until age 70, your benefits increase by 8%. If you do take on a “post-career” job, you may find that 8% ROI enticing and doable. 
4. Rethink your financial commitments. This may be difficult, especially when it involves those close to you. For example, you may have always intended to pay for your child’s college education. But, the truth is, your children have a lifetime to pay off (a reasonable amount of) student loans; your timeframe for retirement security is a lot shorter. Some more good news: There’s currently a lot of discussion about college affordability and free tuition, which could help make this decision easier. 

Why it’s never too early 

It’s tempting to think that younger generations have it “easier” when it comes to retirement savings. Time is certainly on your side if you’re in your 20s. But that luxury can also be a disadvantage if it leads to procrastination. Instead, keep these guidelines in mind. 

1. Get in the habit. Most of us are creatures of habit. The challenge is to develop more good ones than bad ones. If you get in the habit of saving for retirement early on, you’ll increase the chances that you’ll stick with it throughout your working life. As with older investors, take advantage of 401(k) plans and employer matching contributions. With your longer investment window, you’ll benefit from the compound interest — interest on top of interest — that can turn modest lifetime savings into a secure retirement nest egg: Annual savings of $4,500 over a 45-year career can turn into $1 million in retirement. With an employer match, you could save as little as $2,250 a year to reach that goal. 
2. Make it automatic. Use automatic payroll deduction to support your good habit: If you don’t see the money, you won’t miss it. At the same time, add to your retirement contributions as your salary increases, a benefit to your retirement and your tax bill. 
3. Reassess your investments. Regular, automated investing isn’t the same thing as neglected investing. Being a life-long investor means that your life circumstances will change, and your financial priorities and risk tolerance will change along with it. Set up regular intervals to make sure that the investments you have match your goals and situation. Consider engaging a financial advisor as your wealth increases. 
4. Resist temptation. One downside of investing early is that there will be more instances where you’ll be tempted to use your retirement savings for some other purpose. There may be severe cases where that becomes necessary. In all other cases, just say no. 

Why you should start now 

Because something made you read this post, and you’re older now than when you started reading it. 

Because you deserve a great life in retirement. 

Because it won’t be any easier tomorrow. 

If you need additional motivation, consider contacting an advisor who specializes in retirement planning. Like working with a personal trainer, the support of a professional can be what we need to get us to where we want to go. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

To paraphrase the immortal Yogi Berra, “It’s tough to make predictions, especially about the future.” 

Investing in your retirement requires you to not only predict the future but to make financial decisions based on those predictions. How can you make the most informed decisions about your long-term financial needs, regardless of your age or when you plan to retire? 

One common way is to use free online retirement calculator tools. Unfortunately, some of these tools are hosted by financial investment firms looking to promote their services. If you prefer to avoid that, use calculators provided by organizations like AARP. But even the best calculators have their drawbacks because, despite being a good way to get you thinking about what you need — and what you might need to do differently now to get there — they’re based on general data and the law of averages, not on you. 

To get a better sense of your retirement, go beyond the numbers and get to the fundamentals. 

Focus on the constants 

You may not know everything about what you’ll need in retirement, but you’ll need to cover the basics, so start there. 

• Housing. Here’s where knowing your preferences can help you get more specific with your projections. If you’re a homeowner who plans to age in place, will your mortgage be paid off when you retire? If so, that’s great; just remember to account for ongoing maintenance, insurance costs, and property taxes. Consider modifying your home as necessary now while you have a regular income, or downsizing to a more manageable — and less expensive — house. 

Retirement communities are another option. Choices range from individual apartment living to 24/7 care in a skilled nursing setting, and costs vary just as widely. If this is your picture of retirement, price options in your desired location. In a best-case scenario, the money you get from selling your home can cover a significant portion of your future housing costs. 

• Healthcare. According to the Employee Benefit Research Institute, health spending constitutes 8% of expenses for those aged 50 to 64, a figure that rises to 11% for those over 75. It’s essential to account for that increased spending. If you’re currently enrolled in a plan through work, find out what happens when you retire. You may have options to continue with the group plan, or you may have worked at your job long enough to become vested in certain benefits. 

All Americans are eligible for Medicare when they turn 65. Unless you’re getting Social Security, you need to enroll at that age. Medicare will cover about half of your healthcare costs. You’ll need to supplement the plan with private coverage or with the public Part C or Part D. Research the program at medicare.gov and explore the available options and costs. 

Factor in geography 

Certain parts of the country will be more expensive retirement destinations than others. You’ll need more money to retire in San Francisco than you will in Duluth. 

There are factors to consider beyond the obvious cost-of-living items like housing. For example, some states tax Social Security benefits. Check out property taxes and see if any programs exist for homeowners over 65. If you have a sizable estate, be aware that six states currently collect an inheritance tax and 12 collect estate taxes. Because some exemptions apply, it’s worth researching your intended location to learn how these costs could impact you and your family. 

Play the percentages 

Let’s face it: One of the reasons retirement planning is difficult to talk about is because it forces us to think about the other inevitable thing in life besides taxes. But having a reasonable sense of your life expectancy can help you avoid the two major retirement nightmares — running out of money or cutting corners unnecessarily. 

The good news is that people who reach retirement age can expect to live longer. According to the Social Security Administration, men and women who reach age 65 live to ages 84 and 86.5, respectively. With one in three 65-year-olds living past 90 — and one in seven past 95 — a third of your life could be in retirement. 

Balance those odds with your personal health and family history. If you’re married, talk with your spouse about their expectations. If you or your spouse are dealing with an ongoing medical condition, you may want to include long-term care insurance in your retirement plan. 

The good news is, you don’t have to do all this planning alone. Consider talking with a financial advisor who has expertise in retirement planning. After all, these are meant to be your golden years, and you’ve worked hard to make them that way. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

However, while the benefits you’ve earned are guaranteed, not everyone gets the same amount — and you can make choices that either increase or decrease how much you receive and when you receive it. 

To make good choices with your Social Security, you first need to understand how Social Security works. Specifically, it’s important to know that the benefits are progressive. That means, if you’ve earned less than the national average throughout your career, you will have more of your earnings replaced by Social Security. If you’ve earned more than the national average, you’ll have less replaced. In general, lower-wage workers can expect to have about half of their earnings replaced, while higher-wage workers can expect to have a quarter or less of their earnings replaced. 

As of 2020, the average monthly benefit was around $1,503. A cost-of-living adjustment routinely raises benefit payments by small amounts, with payments rising by 2.8% (an average of $40 more a month) heading into 2019 and 1.6% (an average of $24 more a month) heading into 2020. You can expect the average monthly benefit to be higher when you retire than it is now, but the exact amount you receive will be determined by more than cost-of-living increases and your lifetime earnings. It will also be determined by when you start claiming benefits — and that’s where the decision-making comes into play. 

Claiming Benefits 

Early If you want, you can start claiming your Social Security benefits as early as age 62. For some, this may be a necessity due to life circumstances. But, for most, claiming early is not a good idea. If you claim at 62, you’ll only receive 75% of your monthly benefit, and this percentage will never go up, no matter how long you live. The only increases you’ll receive will be cost-of-living adjustments. To avoid this penalty and receive 100% of your monthly benefit, you’ll need to wait until you’re older. 

Receiving 100% of Your Monthly Benefit 

You may have heard that the retirement age is 65. While you’re certainly free to retire whenever you choose, 65 is no longer the age when you can claim 100% of your monthly benefit — and hasn’t been for a while. 

For those born between 1943–1954, the age at which they can claim 100% of their monthly benefits is 66. The last of this group will reach that age in 2020. After that, the age at which someone can claim 100% of their monthly benefit will slowly rise, eventually hitting age 67 for those born in 1960 or later. 

Will that age rise again? That’s impossible to predict, but it could definitely happen. So, if you were born after 1960, you’ll want to pay attention to any future changes. 

Deferring Benefits to Age 70 

For many, holding off on claiming Social Security until age 70 is a smart idea. That’s because, for each year you wait beyond the age you can receive 100% of your benefits, you’ll get an extra 8% per year for the rest of your life. 

This is a great benefit. What other way can you increase your guaranteed yearly retirement earnings by 24%–32%? To see how this deferment can add up for you, check out the Social Security Administration’s benefits calculator. 

The only risk in deferment is the possibility that you won’t live until age 70, or won’t live long enough past 70 to make the increase in yearly benefits a net gain. Currently, the average life expectancy for a U.S. woman is 81.4 and the average for a man is 76.3. However, those life expectancies are calculated at birth and include those who die young. According to the Social Security Administration, a man who turns 65 today is likely to live until 84, while a woman who turns 65 today is likely to live until 86. 

When determining if deferring your benefits makes sense, you’ll want to calculate your break-even date (i.e., the date when the total amount you’ll earn by deferring surpasses the total amount you would have earned if you started claiming your benefit earlier). Then, consider your health, family history, and any other factor that might affect your longevity. For most who reach retirement age, deferring pays off in the long run. 

Considerations for Married Couples 

If you’re married, your spouse’s benefits can become your benefits on the occasion of their death. While considering the death of a spouse is not pleasant, it is an important part of a strong social security claiming strategy. 

As long as both you and your spouse are alive and of retirement age, you’ll each collect your own individual Social Security benefit, beginning at the age of your choosing. If one of you passes away, the surviving spouse will receive the highest of the two monthly benefits. Meaning, if a wife is receiving more in Social Security than her husband, the husband will start receiving her benefit (and his will stop) if she dies. If one spouse never qualified for any benefit of their own, they will begin receiving half of their spouse’s benefit on the occasion of the spouse’s death. 

When deciding on when to start claiming your Social Security, you should take your spouse’s Social Security benefit into consideration. For many couples, it makes sense to defer the benefit of the spouse who will receive a higher amount. That way, whoever lives longest will be guaranteed the deferment bonus for the rest of their lives. 

Of course, making these choices aren’t necessarily easy. And while the Social Security Administration can answer a lot of questions, they are not allowed to help you put together a strategy to maximize your lifetime benefits. For that, you may want to consider a financial advisor with retirement earnings expertise. Social Security is too important to ignore. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.