The Risk/Return Dilemma ofRetirement Investing

Retirement investing is a balancing act. On one hand, most people need their investments earning money to offset the impact of inflation, withdrawals, and taxes on their capital. On the other hand, investing for return involves risk...the risk that your portfolio could lose value due to an underperforming investment or a market downturn.

Because Haas Fydroski Financial Services focuses on active management of retirement assets, we have the ability to invest for potentially higher returns, recognizing that these investments also have higher risk. That risk, however, is managed through our active approach. When market volatility or direction appear to place an investment class in a higher risk level, allocations are reduced and assets may even be moved to a money market position to ride out volatility in a position of relative safety. Our goal is to be invested in rising markets where the opportunity for growth is favorable, but reduce market exposure when the market trend is down to preserve capital.

Naturally, there can be no guarantee that our active approach will be successful, nor is past performance an indication of future returns, but it is a strategy that we have used for over a decade, during some of the most difficult years for investors.

Sheltering Income

Retirement accounts are one of the few true tax breaks available. Because investors are able to defer taxes on contributions to many defined contribution plans, funding a retirement account can reduce current taxes. Your account also grows tax free until retirement, when withdrawals are taxed at your personal income tax level, which could potentially be lower than your present tax rate.

Accounts such as Roth IRAs and Roth 401k plans do not offer the benefit of tax deferral on contributions, but your account grows free of income taxes and withdrawals at retirement are free of federal income taxes.


You may be able to gain greater investment flexibility by rolling over assets held in 401k, 403b and other employer-sponsored retirement plans to an individual Rollover IRA. A rollover allows tax deferral to continue until funds are withdrawn at retirement and also allows greater flexibility in how your funds are managed. Because administrative fees for employer sponsored retirement plans can be considerable, there may also be fee savings from a rollover.

Employer sponsored retirement accounts can be rolled over when employment is terminated, including at retirement. In addition, many plans allow funds to be rolled over into an individual IRA during employment. Check with your plan sponsor for specific details on your plan.