What's important financial advice for those who are newly retired? According to Jane Welch, an Investment Executive at Fifth Third Securities, asset allocation is a priority. However, how assets are allocated depends on a retiree's - or couple's - unique situation and personal objectives. Please note that asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.

"All retirees need cash for ongoing living expenses," says Welch. "But many people underestimate their costs, thinking they'll be able to live more cheaply since they won't have work-related expenses, such as clothes, gas and lunches out. They tend to overlook the new expenses associated with retirement, such as hobbies, entertainment, travel and health care. It's a different lifestyle, but essentially the same standard of living."

Reallocate assets for steady cash flow
Welch says one of an investment professional's priorities is to help new retirees reallocate assets to generate a similar standard of living - if they haven't done so already. "We generally recommend conservative investments that provide a fixed income with little risk for volatility - however, that's for the average retiree."

She says some people receive income from other sources, such as rental property, and don't need to tap into retirement accounts until the mandatory age of 70 and a half. Consequently, they may be comfortable keeping more assets in aggressive accounts, such as stocks and bonds. Perhaps their goal is to leave more for their beneficiaries, such as children, grandchildren or charities.

At the other end of the spectrum are people whose assets won't generate enough income to maintain the same standard of living. "Perhaps they didn't save adequately, their company is no longer offering the pension benefits they had originally expected or they faced some unfortunate event, such as a medical crisis that depleted their savings. Consequently, they may be forced to cut back on living expenses and/or consider another job," says Welch.

Reallocate assets to minimize risks
People may also reallocate investments to minimize risks. "Some people may be too heavily invested in one company, especially if they received stock as an employee benefit," says Welch. "Instead of remaining at the mercy of one company, we may help them diversify."

Others will reallocate assets to minimize taxes. Depending on the size of their estate, they may want to seek help from someone who's well versed in tax laws, such as a tax advisor or an attorney. "This professional may consider their entire financial picture and help them decide whether they should tap into money from retirement accounts or maximize capital gains or losses from an after-tax standpoint. It depends on the situation - there are really no cut-and-dry strategies," says Welch.

She adds that most people's needs change throughout retirement. "An investment professional may also help retirees stay on course and provide guidance for all their estate-planning needs, such as wills and trusts, insurance and long-term care coverage."

Involve those who should be involved
"Many people seek financial advice from their children or other trusted family members, which is fine," says Welch. "However, it's still important for retirees to see a professional at least annually - for a couple of reasons."

For example, she explains that the market is always fluctuating, and some people may need to fine-tune their portfolios. Also, it may be difficult at first for some to know what they want to accomplish in retirement; these decisions often evolve over time. As a result, some may want to restructure their portfolios to finance new goals.

"It's also important for both a husband and wife to be involved," adds Welch. "Usually one spouse handles the finances, while the other remains somewhat unconcerned. But eventually, one spouse will outlive the other. While that surviving spouse may not need to know all the details of these accounts, he or she should at least know the basics or who to call for help."

For more advice on how to allocate assets during retirement or how to find an investment professional, contact Fifth Third Securities at (513) 534-8761 or visit the Fifth Third website.

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