" When Life Changes, Money Changes Part 2 - Retirement”

When life changes, money inevitably changes too. Major life events often prompt reevaluating financial priorities, strategies, and habits. Understanding the intersection of life transitions and financial adjustments is crucial for maintaining financial health and achieving long-term goals. This week we explore transitioning into retirement and the best fixed-income strategies for your savings, and pension funds.

Retirement is one of life’s most significant transitions as the days of regular work and consistent paychecks end, financial priorities shift towards income stability, capital preservation, and the flexibility to handle evolving needs. Retirees must adjust their spending habits to match their new income levels and ensure that their savings are wisely invested to last throughout their retirement years. Effective management involves creating a retirement budget and focusing on essential expenses. Many retirees consider downsizing their homes or relocating to reduce living expenses and improve their quality of life. Regularly reviewing and adjusting investment portfolios to reflect changing financial needs and market conditions is also important.

For many retirees, bond investments offer a vital strategy to achieve these goals. Bonds provide predictable income, reduce portfolio volatility, and can be tailored to suit individual retirement needs. Below are two examples of recommendations that helped two of my clients structure a portfolio using a fixed income-focused strategy to fund a comfortable, sustainable post-retirement life. 

• Chris, 65, recently retired and received a pension lump sum alongside proceeds from the sale of his home after deciding to downsize. Referred to Sterling by a close friend, he sought a steady income to meet his living expenses without depleting his principal. With a total investment of USD 750,000 and a preference for medium-risk exposure with predictable returns, Chris’s primary objective was an annual income target of USD 52,000 to support his lifestyle and travel plans. To meet his needs, we implemented a fixed-income strategy, allocating USD 700,000 across high-quality corporate bonds with staggered maturities and scheduled coupon payments. This portfolio, designed with an average yield of 7.8%, comfortably exceeded his income target while ensuring reliable cash flow throughout the year. The remaining Balance of USD50,000 was placed in a Repo account to maintain emergency cash. Importantly, Chris’ principal is intact, achieving both financial security and stability in retirement.

• Carol, a longstanding client with Sterling and now 68, reached out to discuss reinvestment options for a $200,000 lump-sum payout from a maturing bond. Historically, Carol has been growth-focused, favouring the Sterling Mutual Fund for its strong double-digit returns. However, her priorities have shifted towards stability and reliable income as she nears retirement. After a detailed portfolio review, we adjusted her asset allocation to better align with her new objectives. Specifically, we reduced her position in the Sterling Mutual Fund and reallocated funds to strengthen her bond portfolio. With a total of $500,000, we strategically invested the majority in high-quality corporate bonds to generate consistent income at moderate risk, while the remainder was allocated to long-term government bonds and high dividend yielding USD stocks. This structure positions Carol for a smoother transition into retirement, balancing income and growth with capital preservation.

These cases illustrate how a bond-focused retirement portfolio can be tailored to unique financial needs, blending stability, income, and flexibility. For instance, in Carol’s situation, we transitioned her growth-oriented strategy to an income-focused approach through strategic portfolio rebalancing. By selecting appropriate bond types and considering ladders, bond funds, and inflation-protection tools, retirees can create a sustainable and comfortable financial strategy for their post-retirement lives.