In the last several years, we’ve heard a great deal about Americans living longer and how that affects our country’s health care system. But perhaps not as thoroughly discussed is how our lengthening life spans impact our income and money management during retirement.

In addition to longer life spans, a few additional trends that can impact investment strategy, causing some investors to outlive retirement assets, include low interest rates and rising health care costs. The low-interest rates we’ve seen over the last several years have made it difficult for investors to achieve returns above their draw down rate. And the cost of health care for retirees has continued to rise well above the rate of inflation.  

We should all be thrilled with the thought of living longer, but we should also be realistic about what that means for our finances. Our investment portfolios must be properly structured so we have the assets to cover our needs. A careful balancing act, we can’t be too conservative or too aggressive, as either strategy may adversely affect our ability to achieve the lifestyle we desire for our retirement years.  

Retirement portfolios have traditionally been approached more conservatively, with the focus being more on capital preservation and safe income versus growth. But it may be time for some individuals to rethink that approach and consider retirement investing.

My colleagues in PNC Wealth Management offer the following considerations:

• Investors need to be more proactive with managing their nest eggs, ensuring retirement goals and objectives are reflected in their portfolio’s asset allocation. 
• Selecting an appropriate long-term asset allocation that matches investment goals against risk tolerance and time horizon is vital to managing a retirement portfolio that will serve one’s needs through the years. 
• While some retirees or those approaching retirement may feel uncomfortable increasing their allocation to equities, history indicates that long holding periods can help to mitigate the ups and downs of the equity market. An analysis of annual market returns over 10-year rolling periods dating back to 1929 reveals that portfolios with equity allocations as high as 80 percent never experienced a 10-year annualized negative return. In fact, the lowest annualized 10-year return for a portfolio of 50 percent equity/50 percent fixed income was 2.8 percent. While prior returns may not be indicative of future results, these numbers should provide comfort that a meaningful allocation to equities is appropriate for retirees who need to plan for a long retirement time horizon.

Consulting a financial expert for a retirement account checkup is the best step for making sure you have the best balance and strategy to meet your goals throughout retirement.

Chris George is senior vice president at PNC Bank and longtime Wilmington resident. He has served PNC and its predecessors for more than 20 years in various leadership roles. PNC Bank, N.A., a member of The PNC Financial Services Group, Inc., is one of the United States’ largest diversified financial services organizations, providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management.

These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.