Retirement is a major milestone for many adults, but it can also be a source of anxiety and stress. With rising costs of living, the traditional tolls are more and more difficult to achieve with solely Social Security or pension income alone. But did you know there are options available to help ensure that your retirement is secure? Buffer assets have become increasingly popular in recent years as they offer an alternative way to provide financial security through retirement without sacrificing current lifestyle choices. In this blog post, Anthony Pellegrino discusses what buffer assets are, whether they could be beneficial for you and your retirement savings goals, plus when should you consider adding them into the mix? Keep reading to learn all about how buffer assets might be able to help your retirement plan!
Anthony Pellegrino On How Buffer Assets Might Be Able To Help Your Retirement
Buffer assets can help you in your retirement planning in a variety of ways, says Anthony Pellegrino. A buffer asset is an asset designed to reduce the risk of loss by acting as a cushion between investment portfolios and their corresponding liabilities. Basically, they are investments that provide protection against potential losses in other investments.
For example, one way buffer assets can help with retirement planning is through diversification. By having buffer assets, you are able to spread out your portfolio over various classes of investments so that if one class takes a hit, the rest of your portfolio will remain safe. This protects you from market volatility and offers more stability for your retirement savings goals.
Another benefit of investing in buffer assets is that they tend to be lower risk than many other types of investments. Because they are not intended to generate a high rate of return, they tend to be much less volatile than other types of investments. This means you can expect lower but more consistent returns over the long term and take less risk in your retirement savings plan.
Buffer assets, as per Anthony Pellegrino, also provide protection against inflation. Inflation is when prices go up over time, eroding the purchasing power of your money. Investing in buffer assets helps protect your money from the effects of inflation by providing a reliable source of income that increases at the same pace or higher than inflation. This allows you to maintain your purchasing power while still receiving an adequate return on your investment dollars.
Finally, buffer assets can help reduce taxes during retirement by lowering your taxable income. The lower your income, the less you have to pay in taxes and the more money you’ll have available for other important retirement expenses.
To illustrate the benefits of buffer assets in retirement planning, consider a real-life example: A retired couple invested $50,000 in a mix of stocks and bonds which had an average rate of return of 7%. They also invested $25,000 in a variety of buffer assets that provided an average rate of return of 3%. Inflation was 4% annually over the course of five years. After five years, their portfolio value went up from $75,000 to $99,936 despite inflation eroding purchasing power by 20%. This demonstrates how investing in buffer assets can help preserve and grow your retirement savings.
According to Anthony Pellegrino, buffer assets offer many potential benefits for those saving for retirement. By diversifying your portfolio, protecting against market volatility, and providing a reliable source of income, buffer assets can help you reach your retirement savings goals.