How to Manage Risk and Growth in Retirement Investments

One of the biggest challenges retirees and pre-retirees face is protecting what they’ve built while still pursuing growth that supports income needs throughout retirement. Too much risk can threaten long-term security, while too little growth can increase the chance of running short of money later in life.

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Effective retirement planning isn’t about avoiding risk entirely (that’s not possible) it’s about understanding and managing different types of risk and aligning them with your income needs, time horizon, and overall financial picture.

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Why Risk Still Matters in Retirement

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Many assume risk should disappear once they retire. Risk management becomes more important, but there’s no way to eliminate risk completely. Even conservative strategies carry risk, and over-reliance on safety can expose you to other dangers, like inflation or outliving your assets.

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In retirement, portfolios must support:

• Ongoing income needs
• Longer lifespans than planned
• Rising costs from inflation and healthcare

Four major categories of risk retirees should be aware of:

1. Longevity risk — the chance of outliving your savings as lifespans increase.
2. Market risk — the possibility of investment losses, especially early in retirement.
3. Inflation risk — the erosion of purchasing power over time.
4. Healthcare cost risk — rising medical and long-term care costs.

Without intentional management of these risks, and an appropriate level of growth, even well-funded plans can fail to deliver the income needed over decades.

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Growth Without a Plan Can Be Just as Risky

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Pursuing growth without a disciplined framework can expose retirees to unnecessary volatility. Market downturns early in retirement, a form of sequence-of-returns risk, can have outsized impact when you’re withdrawing funds.

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This is why deliberate asset management is essential. Growth should be:

• Intentional, not speculative
• Diversified across asset classes
• Aligned with income needs then risk tolerance

A thoughtful strategy balances growth potential with protections against downside risks after income needs are fulfilled.

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The Role of Retirement Income Planning

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Managing risk and growth starts with income, not just investments. A strong retirement income plan focuses on:

• How much income you’ll need each year
• Reliable sources for that income
• How withdrawals adjust to market conditions

Income planning helps clarify how much market risk, inflation exposure, and other risks your portfolio must weather while still providing the cash flow you need. Real diversification is the diversification of future cash flows or income sources.

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Retirement Strategies Change Over Time

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Effective strategies evolve as your life and markets change. Early retirement often looks different than later years, spending patterns, health needs, and priorities shift.

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Ongoing planning should include:

• Periodically rebalancing asset allocation
• Adjusting withdrawal rates based on need
• Repositioning holdings as needs and market conditions change

This dynamic approach helps you manage the four major risks while maintaining flexibility and peace of mind.

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What to Do With Your 401(k) When Retiring

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A common question is what to do with your 401(k) when retiring. Options include:

• Leaving assets in your employer plan
• Rolling them into an IRA
• Coordinating the account into your broader retirement income framework

The best choice depends on investment options, fees, income needs, and tax considerations. A coordinated strategy ensures your 401(k) continues to contribute to both growth and sustainable income.

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Why a Fiduciary Financial Advisor Matters

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Managing risk and growth is an ongoing process, not a one-time decision. A fiduciary financial advisor is legally obligated to act in your best interest, offering guidance aligned with your long-term goals rather than product incentives.

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Fiduciary advice becomes especially valuable when addressing:

• How to balance growth and risk
• How to integrate longevity and inflation considerations
• How to plan for rising healthcare expenses

This standard of care helps ensure your retirement strategy is robust and adaptable.

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The Value of Comprehensive

Wealth Management

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Effective retirement planning rarely happens in isolation. It often requires coordination across:

• Investments
• Taxes
• Income planning
• Estate considerations

Comprehensive wealth management services bring these elements together into a cohesive plan, focusing not just on returns but on long-term financial health and resilience.

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Best Financial Planning Strategies

Focus on Alignment

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The best retirement strategies recognize that investing isn’t about maximizing returns or avoiding risk, it’s about managing both intentionally.

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A well-structured retirement investment strategy:

• Helps weather market downturns
• Supports long-term income needs
• Maintains flexibility as life evolves

Achieving this requires ongoing planning, not static portfolios.

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Next Steps

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Retirement investing is about managing risk and pursuing growth that supports your long-term goals. You can’t eliminate risk entirely, but you can reduce market exposure, plan for inflation and healthcare costs, and guard against outliving your assets with the right strategies and guidance.

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At Legacy Wealth Management, we provide personalized retirement planning as part of our comprehensive wealth management services. Our fiduciary advisors help clients evaluate income needs, investment risk, and long-term strategies within a coordinated financial plan.

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If you’d like help reviewing your retirement strategy, or understanding how to find a fiduciary financial advisor aligned with your goals, you can schedule a complimentary meeting by visiting www.lwealthmanagement.com/contact or calling (877) 650-4738.