7 Types of Model Portfolios for Retirees to Consider

Retirees can use model portfolios to balance income generation and risk management based on their goals and risk profile. They typically include a diverse mix of stocks, bonds and other types of investments designed to support their desired lifestyle in retirement.

If you need help balancing your portfolio, a financial advisor can work with you to analyze investments and manage them.

What Is a Model Portfolio?

Model portfolios for retirees are created by financial professionals with a mix of asset classes that achieve a specific balance between risk and return.They allow investors to explore different investment strategies without needing to build their portfolio from scratch and are rebalanced periodically to maintain the intended risk level and performance objectives.

How to Choose a Model Portfolio

When choosing a model portfolio, you'll need to assess your income needs, risk tolerance and time horizon. You may also want to work with a professional. Here's a closer look at these four general tips:

• Assess your income needs. Those who rely heavily on their portfolio for income might lean toward conservative portfolios that offer more stability and prioritize income over growth. A retirement calculator can help you determine what you'll need.
• What is your risk tolerance? Risk tolerance is equally important. Retirees comfortable with some level of risk may consider growth-oriented investment portfolios that include a higher percentage of stocks that aim for long-term growth and help retirees preserve purchasing power.
• How long will you need your portfolio to last? The best age to retire is going to be different for everyone. Younger retirees benefit from more exposure to equities for potential growth while older retirees may want low-risk portfolios designed to generate reliable income.
• Work with a professional. A financial advisor can be instrumental in helping retirees select and access the right model portfolio. Advisors have the expertise to assess your income needs, risk tolerance and long-term goals to recommend a portfolio that aligns with your objectives.

Types of Model Portfolios for Retirees

There are different types of model portfolios. So you will need to know to select one that aligns with your specific financial goals, risk tolerance and income requirements in retirement. Here are seven general models to consider:

• Conservative income. This portfolio typically allocates about 60-70% of its assets to fixed-income investments like bonds , with the remainder split between equities and cash or other liquid assets. The limited exposure to stocks could help protect against market volatility, making this option attractive for older retirees who prioritize stability and predictable income.
• Balanced income and growth. This portfolio generally distributes 40-50% of its assets to equities and 40-50% to bonds, with a small allocation for other asset classes. This portfolio is suitable for retirees in their 60s or early 70s who still seek moderate growth but also need income. The balance between growth and stability maintains purchasing power without excessive risk.
• Growth-oriented. This portfolio focuses on maximizing investment returns by having a higher percentage of assets in stocks compared to bonds and cash. This portfolio is more appropriate for younger retirees in their late 50s to early 60s who don't want to outlive their savings. The higher stock allocation provides potential for capital appreciation, while bonds and cash offer some stability. Retirees who can afford more market exposure due to part-time work or pensions may find this portfolio particularly appealing.
• Dividend-focused. This portfolio tends to have around 50-60% of their assets in dividend stocks , with the rest in bonds and other income-generating assets for some stability. This portfolio is a good fit for retirees in their late 60s or early 70s because dividend-paying stocks provide a regular income stream that can be used for living expenses or reinvested for further growth.
• Inflation-protected. This portfolio generally allocates 40-50% of its assets to inflation-hedging investments, such as TIPS bonds , with the rest in a mix of stocks and real assets. This portfolio works well for retirees concerned about their purchasing power as it offers a safeguard against inflation while still allowing for some growth through equity investments.
• Income maximization. An income maximization portfolio is designed to generate monthly income. It typically allocates 40-50% of its assets to high-yield bonds or other income-producing investments, with the remainder in dividend-paying stocks and alternative assets. Retirees seeking higher yields often choose this portfolio, though regular reviews are necessary to manage risk appropriately.
• Defensive. This portfolio allocates around 50-60% of its assets to bonds and other low-risk investments, with the remainder in defensive stocks and cash. This portfolio is ideal for retirees of any age who are highly risk-averse and focused on capital preservation. Defensive stocks, which tend to be more stable in volatile markets, offer some exposure to equities without the higher volatility of growth-oriented investments.

Bottom Line

Retirees can use model portfolios to meet a variety of financial needs. As a retiree you might use a model portfolio to simplify your investment decisions and maintain a balanced, diversified strategy that aligns with your income and risk needs. Whether you want to generate steady income, preserve capital or seek moderate growth, these portfolios can offer you a structured way to manage your investments.

Tips for Retirement Planning

• A financial advisor can help you create a retirement plan based on your needs and goals. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now .
• Creating a reliable and adequate income stream from investments is one of the main goals of retirement planning. Here are four general investment options to consider .

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