The “Retirement Red Zone” is a term coined by Prudential a few years ago to describe the years leading up to and into retirement. The metaphor derived from the football terminology for the area inside 20 yards of your opponent’s end zone is a fitting term. In football, the Red Zone provides teams the opportunity to score points and dramatically increase their chances of winning the game. However the field is short, and weaknesses are harder to disguise. With retirement planning, it is very similar. You have worked hard all of your life and you are within striking distance of the retirement you have dreamed of. However, risks are higher and the impact of decisions are amplified for better or worse.

Adjust Your Strategy

Just like a game of football, where teams adjust their strategy as the game progresses. Investors must also adjust their strategy over the years. During your working years, the period retirement strategists refer to as the “accumulation phase”, your investments were likely geared toward growth and you had the discipline and time to invest through market volatility. Those days of investing through volatility helped your portfolio grow over the years. Unfortunately, as you enter the Retirement Red Zone, you might not have the time to recover short-term losses. The prospect of having to liquidate depreciated assets to cover retirement income is now becoming real. This is a risk known as sequence of returns risk – the risk that you will experience lower returns early in retirement. Those low returns early can jeopardize plan longevity or require lifestyle adjustments. Your retirement plan should include investments that are ready for liquidity events in the early years as well as a portion focused on longer-term growth for the later years. Striking the right balance to meet your needs is an important key to retirement success.

Maximize your plan by allowing the portfolio stars to shine

In the game of football teams have many players who all have specific jobs. Most great teams have a select few players who make everyone around them better. Your retirement plan should be the same. There are many investment vehicles to choose from however, they are not all equal. By leveraging vehicles such as Pensions, HSA, 401k, and Insurance vehicles you can utilize the specific features that make these accounts unique and address specific retirement needs. This will help your other retirement assets such as a Roth IRA and other vehicles with features specifically designed to create more longevity grow.

Practice makes perfect

Any successful football team has likely put in hours of practice to get to that Red Zone. At PSWA we encourage our clients to practice their retirement plan before they are fully retired. One of the biggest changes most retirees face is the psychological shift from working to not working. We encourage our clients to use vacation or decrease hours in the office to test out various retirement lifestyles. How will you restructure your life when your day is full of free time? What will you want to accomplish daily, weekly, monthly to feel fulfillment?

This transition phase often leads to changes in expectations around retirement and new goals for life in retirement. It also offers you the opportunity to test out the retirement cash flows and income plan.

Play calling in the Retirement Red Zone

Like most successful football teams having assistant coaches helps the head coach maximize performance and increase the probability of success. If you do not feel prepared to call the plays for your retirement and are looking for assistants to help you see which calls will have the best benefit for your retirement, please contact us.

As your assistant coaches, we work with you to develop the right personalized solutions and game plan to cross the end zone and enjoy your life in retirement. With our expert advice, open communication and modern approach we can create a championship team!


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