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Balancing Act Retirement Living


L


ose your balance and you can suffer a serious fall. The same thing can happen to your invest-


ment portfolio if you fail to diversify. You need a balance of both stocks and bonds in a portfolio. Stocks provide higher returns but bring the risk of 20 to 50 per- cent bear market losses every five or six years. Bonds provide stability (ballast) to offset stock volatility but produce lower returns. Together they keep portfolios on an even keel with lower volatility, which results in greater returns over time. When you retire and tap investments for


income, there is a temptation to buy more income-producing securities in the mistak- en belief that only income — not principal — is spendable. In today’s low-interest-rate environment, that can be risky behavior.


One risk is forgoing safety in return for higher yields. You know “you don’t get something for nothing,” so anything with a high payout has some negative character- istics — usually greater risk. Another risk is overloading your port- folio with bonds or “bond-substitutes” to meet income needs. That reduces long- term appreciation potential and leaves the entire portfolio vulnerable to rising inter- est rates and inflation. Reducing stock exposure in retirement


makes sense, so long as balance (diver- sification) is achieved. Otherwise your portfolio could end up like the actor in that commercial shouting, “I’ve fallen and I can’t get up.” —Capt. Kent M. Grealish, USN (Ret), CFP® AIF®


Family Matters


Discover helpful resources for military spouses and children.


Military moves can be difficult on every family member. But now, military families PCSing with children have a resource avail- able to make the


transition a little more exciting. PlayAcros sAmerica.com — cre- ated by Army spouse Amy Rowland — is a crowdsourced play- ground guide that is Android-friendly and available as an iOS app. The purpose is simple: to help parents find playgrounds for their children, which can be surprisingly difficult while traveling across the country. Rowland hopes to have 1,000 playgrounds listed by the end of the year. To find a playground near you, visit www.playac rossamerica.com.


read more: See “Financial Forum,” page 52, for information on the new service retirement program. IMAGES: ABOVE, ELWOOD SMITH; RIGHT, SHUTTERSTOCK


JUNE 2016 MILITARY OFFICER 23


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