• 3-Minute Article
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  • Mar 21, 2019

How Asset Allocation Portfolios Can Help You Meet Your Retirement Goals

These portfolios offer investment diversification while allowing you to work with your financial professional on other areas of retirement planning.

When developing a comprehensive retirement strategy with your financial professional, two key considerations include a well-diversified mix of investments and sources for future income. The role of your financial professional is to help create a plan that addresses your specific financial situation — with a product mix consisting of diversified investments — to help deliver the potential investment growth you may need at a comfortable level of risk.

One potential solution that may help strengthen both of these retirement plan considerations is a variable annuity with a living benefit. Together, they can provide guaranteed income along with a range of investment options to help harness the benefits of diversification. Some variable annuities also provide asset allocation portfolios (among other investment options), offering a streamlined way to design a diversified investment strategy.

Understanding Asset Allocation Portfolios

Understanding Asset Allocation Portfolios Asset allocation portfolios are designed to help meet the investment needs of various types of investors who have different retirement time horizons and tolerance for investment risk. They feature a pre-selected and balanced mix of investments among equity, fixed income and other asset classes to provide a single, diversified investment portfolio for specific needs within a retirement plan. Although a diversified portfolio doesn’t guarantee investment growth or protection against loss, since asset allocation portfolios are managed by a professional investment team you can focus on their performance as part of your overall retirement plan rather than discussing individual investments and allocations.

Generally, asset allocation portfolios are broadly diversified among a range of asset classes, including both U.S. and international stocks and bonds. Some portfolios are more conservative while others are more aggressive. Such portfolios are designed to offer individuals investment options that align with their goals for long-term growth, within their annuity, as part of their overall retirement plan.

Asset Allocation Portfolio Examples: Diversified Solutions for Different Client Profiles

Portfolio Allocation Model Example

These options simplify the process of developing an investment mix. Rather than exploring dozens of different fund or portfolio choices that may align to your retirement objectives, a financial professional can guide you through a simple questionnaire to help identify the asset allocation portfolio that best meets your needs. For example, you may want a portfolio within the variable annuity that seeks future income, or one that pursues higher long-term growth. Additionally, you can ask your financial professional for help selecting asset allocation portfolios that complement investments in other accounts, helping to achieve proper diversification across the entire retirement strategy.

Professional Partners on Your Team

Assembling and managing investment portfolios is time-consuming. But with asset allocation portfolios, a professional investment management team creates the investment mix and ensures it remains properly balanced based on the fund’s underlying investment strategy year after year.

For example, an investment team creating asset allocation portfolios typically researches market and asset classes performance, runs simulations to test and optimize portfolios, and then selects appropriate funds from a list of quality investment firms. Once they’ve created the portfolios, the investment team continually monitors performance and makes adjustments as needed.

While this team of experts are handling those tasks, you can spend more time working with a financial professional on the personal details of your retirement plan, such as developing healthy savings strategies, securing future income sources, managing taxes for optimal efficiency and finding the best ways to help pay for healthcare in retirement.

These considerations – along with investment diversification – are the foundation of a retirement plan and are areas where a financial professional's guidance can be especially important. By simplifying the diversification process, asset allocation portfolios can give you more time for these and other priorities—without sacrificing an investment strategy designed to help meet your financial goals.