Coordinating Assets in Retirement: Diversification and Asset Class Integration.

Retirement is a major financial milestone that requires careful planning to help maximize the stability and longevity of your savings. While diversification is often emphasized, another key aspect of retirement planning is effectively coordinating your assets. This not only involves diversifying your investment portfolio but also expanding your strategy to include various asset classes. This approach can help mitigate risks, especially during market downturns in the distribution phase of retirement.

The Importance of Portfolio Diversification Diversification within your portfolio can help minimize risk by spreading investments across different asset types, such as stocks, bonds, and other securities. This strategy helps protect your overall portfolio from becoming overly dependent on the performance of any one asset. A well-diversified portfolio can help reduce the impact of market volatility, providing smoother, more predictable returns over time.

Market declines are inevitable, and as investors approach retirement, the challenge of a shorter time horizon becomes more pressing. Market Declines and the Problem of Time

As you near or enter retirement, the time available to recover from market losses shrinks. While stocks and bonds have historically had a negative correlation, this was not the case in 2022, when both experienced a challenging year. For this reason, diversification across alternative asset classes becomes crucial to help protect your retirement funds from potentially severe downturns. Spreading investments across different sectors or geographic regions can help protect your portfolio from the full impact of such declines.

Beyond Portfolio Diversification: Asset Class Integration While portfolio diversification is essential, it’s not enough on its own. As you approach retirement, it's important to broaden your diversification to include a variety of asset classes and coordinate how these assets work together. In retirement, your assets serve more than just accumulation—they must also provide income, cover emergencies, and offer confidence through market downturns, interest rate hikes, or other unforeseen challenges.

Asset class integration refers to incorporating a range of assets, such as equities, bonds, whole life insurance, real estate, and income annuities, to create a more resilient retirement strategy. Each asset class has its own strengths and weaknesses, and proper coordination allows them to realize their full potential within your plan. By leveraging different asset classes, you establish multiple income sources and reduce reliance on a single type of investment.

A study by Ernst & Young highlights the substantial benefits of integrating multiple asset classes in retirement planning. Benefits of Asset Class Integration Study

Their research found that individuals who diversified across a broader range of asset classes, including investments, whole life insurance, and guaranteed income sources such as pensions or income annuities, experienced more robust retirement outcomes. These included reduced portfolio volatility and increased income sustainability. Asset class integration enables a more flexible and adaptable approach to drawdown strategies, helping to ensure you don’t outlive or outspend your assets.

Why Coordinating Assets Matters in Retirement Coordinating various asset classes gives you greater control over your retirement income stream. For instance, integrating whole life insurance and annuities alongside equities can help provide protection during market downturns, as neither are correlated with the stock market. At the same time, real estate or alternative assets, such as commodities, can serve as hedges against inflation.

The combination of asset classes strikes a balance between growth potential and income stability. This coordination is especially important in retirement, when the focus shifts from accumulating wealth to spending it in a sustainable manner.

Creating a Plan That Works for You The key to a successful retirement is having a plan that adapts to changes in the market and your personal circumstances. Whether you're years away from retirement or approaching it, diversification and asset class integration should be central components of your financial strategy.

Working with a dedicated financial advisor and team will help you assess your risk tolerance, time horizon, and income needs, allowing you to structure a portfolio that is not only diversified but also well-coordinated to achieve your retirement goals.

Please reach out to me to discuss your goals and ensure you're on track for success.

-Michael McSweeney

Ascend Wealth Partners

***

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America? (Guardian), New York, NY. PAS is a, wholly-owned subsidiary of Guardian. Ascend Wealth Partners is not an affiliate or subsidiary of PAS or Guardian. CA Insurance License 0I94759 7187717.1 ?exp 10/2026

?