I’m a Retirement Planner: 10 Best Ways To Keep Your Nest Egg Safe
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J. Arky
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Molly Sullivan
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Planning for retirement can be a complicated process, full of in’s and out’s along the way, well before you work your last day on the job. During that time, chances are you are saving and adding to funds that will last throughout your Golden Years. But how are you managing to keep that money safe?
“Vigilance, diversification, and limiting risk are the pillars of nest egg protection,” said John F. Pace, CPA and tax manager for Pace & Associates CPAs. “Stay involved in the management of your assets before and through retirement to safeguard your financial future.”
Here are the 10 best ways to keep your nest egg safe from retirement planners and financial experts.
Diversify
When it comes to diversification, Pace means across accounts and investment types.
“Have a mix of individual and joint accounts, as well as CDs, bonds and conservative stocks. That way no single downturn can devastate your savings,” Pace said. “When I was a trust officer, I ensured portfolios were balanced to minimize risk.”
“Don’t put all your eggs in one basket,” added David Brilliant, tax, trust and estate lawyer at Brillant Law. “Spread investments across asset classes like stocks, bonds, real estate and precious metals. Also diversify within each class by choosing a mix of large cap, mid cap, small cap, domestic and international. That way, if one area declines in value, the others may hold steady or increase.”
Establish Proper Accounts
In order to start saving and working toward your financial future in retirement, you need to establish the right accounts and set them up properly.
“For married couples, joint accounts offer access but expose assets to creditors while individual accounts in each name provide more protection,” said David Fritch of Fritch Law Office and CPA Practice.
“Diligent planning with knowledgeable professionals is key to protecting your nest egg,” Fritch said.
Pick Guaranteed Income
There is a fixed income and cost of living when you retire, so you want to make sure that you are generating as much revenue as possible for those later years when you will not be working.
Prestizia Insurance founder John Crist said, “Choose annuities and fixed index annuities which offer guaranteed income for life. These products allow you to convert your retirement fund into a lifetime income stream, eliminating the risk of outliving your money.”
Go With Low Risk and Low Fee
“Choose low-risk, low-fee options,” Pace said.
Crist agreed, “Opt for low-risk, low-fee investment vehicles like money market accounts and certificates of deposit. These FDIC-insured options protect your principal while generating modest returns.”
According to Brilliant, CDs, money market accounts and bonds are great options to check into when you are first starting to make a nest egg.
“High fees and volatile investments erode your principal,” Pace continued. “Focus on stability and limiting costs. At my CPA firm, we recommend CDs, money markets and high-quality short-term bonds for nest eggs.”
Consider Inflation and Taxes
Just because you are not working does not mean that the economy has also retired. Factors such as inflation can have a big impact on your nest egg, particularly if you have put your money in companies, stocks and other investments that are influenced by market trends.
“Be mindful of inflation,” said Justin Godur, the CEO and founder of Capital Max. “It erodes purchasing power over time. Investments in assets that traditionally outpace inflation, such as real estate and equities, can help maintain your nest egg’s value.”
“Consider Treasury Inflation-Protected Securities (TIPS) and other assets that tend to keep pace with inflation, such as real estate and dividend-paying stocks,” said Rose Jimenz, a financial specialist.
“Another critical point is to consider tax-efficient strategies,” Godur pointed out. “Utilizing tax-advantaged accounts like Roth IRAs or 401(k)s can significantly reduce your tax burden, allowing more of your money to grow.”
Keep Records Up To Date
Pace recommended that while planning for retirement, updating beneficiary designations regularly is key to protecting your nest egg.
“Failing to update these as life circumstances change can lead to assets going to unintended recipients. I’ve seen costly legal battles emerge from outdated designations,” Pace said. “Review yours annually.”
“A living trust is one of the best ways to avoid probate and keep assets private while providing for their orderly distribution,” Brilliant said.
“A properly funded revocable living trust, with a pour-over will as backup, gives you control during your life and passes assets to beneficiaries privately at your death. Review and update beneficiary designations periodically to reflect your current wishes,” Brilliant continued.
Monitor Health Expenses
For those who are in retirement or set to be, one cost of living adjustment is preparing for the amount spent on healthcare, even with the support of Medicaid and Medicare. As you get older, it’s important to track how much you are spending in this area so it does not burden you or sink you into debt.
“Consider investing in long-term care insurance to cover potential costs for extended care,” Jimenz said. “Additionally, take advantage of health savings accounts (HSAs) if you’re eligible, as they offer tax benefits and can be used to pay for qualified medical expenses tax-free.”
Hire Trustworthy Professionals
This is your money, so Pace shared that you should choose advisors carefully and monitor them once you have a working relationship in place.
Crist recommended that someone who is building up a nest egg “work with a financial advisor you trust to develop an investment strategy aligned with your risk tolerance and goals. They can guide you through market ups and downs, helping ensure your nest egg lasts as long as you do.”
“Interview estate planning attorneys, CPAs, financial advisors and money managers before hiring them,” Brilliant said. “Check credentials, experience, references, services and fees. Once hired, meet regularly to review and update plans. Careful planning and the guidance of knowledgeable professionals are two of the best ways to keep your nest egg safe.”
Have Some Cash Easily Available
Putting your assets into funds, accounts and portfolios helps them to grow over time. However, it can be tricky to liquidate lots of your money in those places, so it’s best to keep some cash around for unexpected expenses.
Crist advised to “keep some cash on hand for emergencies and short-term needs. Hold six to 12 months of expenses in a high-yield savings account. This way you avoid tapping into long-term investments unexpectedly.”
Double Check the Details
“Check account statements frequently for errors or fraud,” Pace said. “As CPAs, we recommend reviewing statements monthly to catch issues early. Even trusted advisors can make mistakes, so diligent monitoring is key.”
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