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    How to manage your retirement portfolio

    September 13, 2024

    how to manage your retirment portfolio

    When you think about how to plan for retirement, do you feel excitement, or dread?

    The day you retire should be a celebration. You’re through with the nine-to-five, and it’s time to enjoy what makes you happy—traveling, relaxing hobbies, or new life pursuits. But for some, thinking about that day conjures feelings of anxiety.

    If you’re apprehensive, it’s okay. Huge milestones in life often demand uncomfortable adjustments. On top of that, there is the assumption that retirement planning is confusing at best and baffling at worst.

    One of the hottest discussion points and trickiest things to learn is how to manage your portfolio. Let us help by adding some clarity to that process.
     

    Pieces of managing a retirement portfolio

    When deciding how to manage your retirement portfolio, it’s good to know what the common retirement portfolio needs are and then decide if yours match. Here are some of the key pieces:

    • Asset accumulation
    • Protection against volatility
    • Principal protection
    • Lifetime income

    Asset accumulation

    Preparing for retirement is time well spent. Before the day comes that you retire, you want to make sure you have enough for the long haul. In preparation for that day, you’ll likely want your money to work for you. Saving and making wise investment choices—often with the help of a financial professional who you trust to manage your portfolio—can often be rewarding in the long run.
     

    Protection against volatility

    The years before and the first years of retirement are crucial to the longevity of your portfolio. The way you plan becomes more important than ever. But predicting how much income you'll need is difficult due to market volatility and inflation. Personalizing a plan for your needs with a financial professional can help you on your path to financial stability.
     

    Principal protection

    Every retirement plan comes with a bit of portfolio risk. Once you’re in retirement, you’re probably more loss averse than ever since you don’t have as much time to recover from market downturns. Yes, it can be scary to watch the market go up and down. But one possible option is a common one: diversify.* Now’s the time to spread your wealth around and prepare your portfolio for risks that are often outside of your control.
     

    Lifetime income

    Two major risks in retirement are running out of money and outliving your assets. So, living your retirement to the fullest often hinges on having a steady stream of income. Saving diligently and living a long, healthy life should be rewarded—not cause financial woes. You might even want your family or loved ones to be taken care of when you’re gone.
     

    Annuities as a tool in your portfolio

    Working to address the four key retirement portfolio needs highlighted above can be a tall order for any financial professional. Fortunately, certain annuities can help address two or more of these concerns—some may even address all four – depending on your specific financial plan.

    But first things first. What exactly is an annuity? Well, there are many types, and each type has its own unique characteristics, with differences that are significant or subtle depending on what you’re using it for. But generally, it’s a retirement product that can help you pursue:

    • Tax-deferred† growth
    • Some level of protection
    • Guaranteed lifetime income‡
    • Legacy planning

    An annuity can help bridge the gap between the savings you’ve accumulated over time and traditional sources of retirement income, like Social Security. And if you don’t need the income immediately, any gains you have within the annuity won’t be taxed until you begin taking withdrawals from the contract. It’s called tax deferral.

    Overall, an annuity may be a helpful addition to your portfolio if you are:

    • Still in the workforce and want to maximize your retirement investments
    • Approaching retirement and are concerned about market volatility
    • Already retired and need to protect your investments
    • Seeking reliable income that lasts as long as you do§
    • Planning to leave a guaranteed benefit for your family once you are gone

    Does an annuity fit into your retirement portfolio?

    As mentioned before, annuities can be versatile with options tailored to your retirement plan. When considering an annuity, the process can look like this:

    1. Decide when you need retirement income. You can invest a lump sum and choose to start taking withdrawals immediately or hold off for a better time to begin.
    2. Choose a product that’s right for you. There are many types of annuities, all with unique nuances that could fit your plan.
    3. Customize with income or legacy options. Discover how add-on benefits§ can guarantee income for life** or help you leave a legacy.

    Let's look how annuities could help address the four key portfolio needs discussed earlier.

    Asset accumulation

    Variable annuities are like many other investments in that they have unlimited growth potential—with the caveat of unlimited loss as well. But when tailored to your specific needs, they could help be a source for the tax-deferred growth you need to feed your future retirement. Many variable annuities also have add-on living benefits—available for an extra cost—that can help grow income in retirement if you don’t need to take withdrawals from your contract right away.

    For the more conservative investor, fixed annuities, fixed index annuities, or registered index-linked annuities (RILAs) could help provide growth with some level of protection.
     

    Protection against volatility

    We all have a specific threshold for loss—some are willing to risk loss for reward and some not at all. Choose a RILA to prioritize growth opportunities while limiting the amount of loss you're willing to take on. Being versatile, they allow flexibility within your portfolio due to index options and protection levels.

    Unlike other annuities, fixed annuities and fixed index annuities offer full downside principal protection—meaning there’s no market loss whatsoever. Keep in mind that these annuities have limited or fixed returns.
     

    Principal protection

    Some of us have zero threshold for loss, period. And so, protecting our initial investment through diversification and playing it safe becomes a top concern. Fixed index annuities offer full downside protection, allowing you to pursue growth tied to a specific index of your choice.

    Similarly, moving your retirement assets out of risky and volatile markets and into a fixed annuity can help keep your principal protected from sharp downturns.
     

    Lifetime income

    When you leave the workforce, that income is shut off. Hopefully you have saved enough to live off, but for many, another income stream is needed in retirement—and Social Security just isn’t enough. Many variable annuities offer guaranteed lifetime income by electing an add-on living benefit for an extra charge. These may help protect what you've earned and generate a lifetime of reliable payments.

    Certain RILAs and fixed index annuities offer the same guaranteed lifetime income as variable annuities, only with full or partial downside protection built in.
     

    Let us help add clarity to your retirement portfolio management process.

    At Jackson, we believe that knowledge empowers. And that preparation is key to pursuing a healthy, happy retirement. We want every American to feel that retiring with some sense of security and comfort is within reach. So, we want you to take advantage of the many resources we offer at our Retirement Research Center. Our latest study, Research, Analysis, and Insights on Addressing Inflation Risk , explores the impact of inflation risk on retirement income planning.

     

    Talk to your financial professional about your retirement goals and how an annuity may help you manage your portfolio.

    Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts. Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on living benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity and may be subject to conditions and limitations. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

    *Diversification does not assure a profit or protect against loss in a declining market.

    †Tax deferral offers no additional value if an IRA or a qualified plan, such as a 401(k), is used to fund an annuity and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

    ‡Guarantees are backed by the claims-paying ability of the issuing insurance company.

    §Add-on benefits that provide income for the length of a designated life and/or lives may be available for an additional charge. The amount of income that these benefits may provide can vary depending on the age when income is taken, and how many lives are covered when the benefit is elected. The cost of these benefits may negatively impact the contract's cash value. There is no guarantee that a variable annuity with an add-on living benefit will provide sufficient supplemental retirement income.

    **On the contract anniversary on or immediately following the designated life’s attained age 59½, the for-life guarantee becomes effective provided: 1) the contract value is greater than zero and 2) the contract has not been annuitized. If the designated life is age 59½ on the effective date of the endorsement, then the for-life guarantee becomes effective on that date.

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    Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

    Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

    Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company®, and Jackson National Life Insurance Company of New York®.