You have worked hard your entire life to build a Nest Egg that will carry you through your golden years. You now want to preserve the value of your Nest Egg. After all, its intended purpose is to augment your income and provide you with the lifestyle you want to enjoy. You can accomplish both by changing your perspective and your portfolio.

The Preservation phase of Financial Planning needs to consider the following:

Risk – Once retired, you should dramatically reduce your risk position in your investment base. The basic principle is if you lose a substantial portion of your Nest Egg to stock market fluctuations you may never recoup your losses. In the worst case scenarios many seniors have had to go back to work.

Rate of Return – You want to achieve the greatest rate of return with the least possibility of loss. Fixed accounts like CD’s, offer a fixed rate of return. Variable accounts like mutual fund returns are based on market performance. Equity-Indexed Annuities offer a fixed rate with a possibility of a significantly greater return if the market indexes go up on an annual basis.

Accessibility – You should maintain a liquid emergency fund equal to six months of living expenses. A home equity line can provide other additional funds for emergencies.

Long-Term funds like IRA’s and Nest Egg money should not be accessed at a greater rate than 4% per year. Using that premise you should never run out of money assuming you are not losing in your investments and your financial plan is sound and achievable.

Insurability – Money in banks and credit unions is insured to $100,000. Money in Equity Indexed Annuities is insured to $300,000. Money in mutual funds and stocks is not insured at all. A home-owners insurance policy will protect from the loss of your home but should be reviewed every 2 years. Life insurance may be vital to your Estate Planning but only if it is cost effective and fits into your overall strategy (usually for tax strategies).

Simplicity – The older and wiser you get, the more simple you want your financial plan to be. Do not hold investments that you do not completely understand nor give your blind faith and trust to an investment broker. Know how your money is invested, where it is invested, and what are the risks involved.

Fees and Money Management Costs – If you are paying fees to an investment broker then your money is probably at risk. Reducing the broker fees may also reduce the risk.

Probate Avoidance – All of your accounts need to have the proper beneficiary designations. This includes: Payable on Death (POD’s) for Bank accounts and Transfer on Death (TOD’s) for brokerage accounts. Any accounts that do not have proper beneficiary designations will go through the probate process. Probate means a delay in distribution to your heirs and significant costs involved that will erode the account values.