Approach your retirement with confidence

In 1980, a well-diversified portfolio yielded 8-9%. Today, portfolio yields have declined to 2%. Even nearly a decade after the financial crisis, the “new normal” of low interest rates, modest economic growth and low inflation has given way to, simply, “normal.” If you’re like most income-seeking investors—especially retirees—this trend has a potentially far-reaching impact.

Key takeaways

  • Nominal interest rates haven’t been as low as they are today since the 1940’s. CIO Wealth Management Research (CIO WMR) doesn’t believe investors can count on substantially higher fixed income returns at any point in the near future.
  • And investors cannont count on high equity returns to offset low returns from fixed income.
  • Most retirees should hold globally-diversified protfolios as return prospects outside the U.S. appear more attractive over the next decade.
  • New retirees can still withdraw 4% if they are willing to spend down retirement assets and if they accept there’s some chance they will have to reduce spending in the future.
  • Understanding how to react to the stress that retirement creates can help increase satisfaction in retirement.
  • Segmenting assest into liquidity, longevity and legacy portfolios can help retirees meet their spending opjectives while also holding a high-quality well-diversified porfolio.

CIO WMR’s latest edition of Your Wealth & Life, Retirement planning—What to do now  (PDF, 1 MB) provides much-needed context about the concerns retirees are facing issues and offers insights that can help you plan for retirement with more confidence. It also answers important questions such as:

  • What’s driving current low interest rates and high equity valuations?
  • What are current “safe withdrawal rates”?
  • How can you reduce stress and increase satisfaction in retirement?
  • How can effective strategies, such as the “3Ls”, bond ladders, immediate annuities and QLACs raise your confidence about retirement?  

To better understand how to plan for retirement in a way that supports your overall financial goals, connect with a UBS Financial Advisor or find one

About Your Wealth & Life

This quarterly report from the Chief Investment Office Wealth Management Research (CIO WMR) delivers actionable strategies and financial solutions to address your most pressing concerns, so you have more confidence pursuing your financial future.