• 2-Minute Article
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  • May 07, 2018

How to Build a Portfolio That Can Weather Market Shifts

Annuities can provide a safety net when diversification isn't enough.

Planning for your future naturally involves facing some uncertainty about how the financial markets will perform. The stocks and bonds that are in most investors’ retirement portfolios routinely have their ups and downs, which can impact the value of your savings.

These downturns can be scary, but they don’t mean you have to put your money under your mattress. There are smart ways to save for your future without sacrificing your long-term goals or risking your short-term cash needs. It starts with a well-balanced mix of traditional investments, such as stocks and bonds. Then, you can add a source of stable income, such as an annuity, to ensure your money will be there when you need it. Just as you use insurance to protect your car or your home, you can use an annuity as insurance to protect your nest egg.

Here are two questions to ask yourself to determine how a stable income source could help shore up your savings:

How Much Stability Do I Need?

Determining how much income you need starts by comparing your monthly expenses against the cash you have coming in every month from sources like wages, Social Security, and pensions. If there’s a gap between those numbers, you might add another source of guaranteed lifetime income payments. For example, an immediate annuity can help you pay your bills so you don’t have to tap your other savings to cover any shortfalls.

If you’re still saving for retirement, you can estimate future expenses and place a portion of your savings into a stable source of future income, such as a deferred annuity. This approach provides comfort that some money will be there when you need it.

Will My Savings Grow Enough to Support Me in the Future?

Retirement can last a long time—up to 30 or more years according to recent estimates—and that means it’s important that your savings continue to grow throughout retirement.

To help ensure you don’t outlive your money, earmark a portion of your savings for income needs and a portion for growth. Then, if you decide to add a guaranteed income source such as an annuity, you can purchase it using liquid assets from your income portfolio. This approach lets you maintain the right balance between growth and income, because you won’t be selling some of the stocks you need to meet longer-term financial goals.

Market ups and downs are inevitable. But adding stable income tools to your savings mix means you can weather those storms with more confidence. You’ll know that your money will be there when you need it—whether that’s in 3 years or in 30.