Navigating Retirement in the 21st Century

Wall Street isn't the only place to invest your money, especially if you're close to retirement. A financial planner outlines the three kinds of money retirees should have available for enjoying the golden years with peace of mind.

While the world is still feeling the long ripples of the economic meltdown that began six years ago, our economic institutions remain “too big to fail” — at least in the minds of millions of retired Americans and those soon to join their ranks, says veteran financial advisor Curt Whipple.

“That’s what we see when we review their retirement portfolios,” says Whipple, a Certified Wealth Strategist and a Certified Estate Planner. “I see it all the time: a new client comes in with what they believe to be a ‘diverse’ portfolio. While it may be diverse in terms of Wall Street holdings, a solid retirement plan also requires diversity outside of a system that’s ‘too big to fail,’ which could fail yet again.”

Whipple, the chief executive officer of C. Curtis Financial Group, which recently published the retirement planning guide Retiree Lifeline! How to Get Government Out of Your Pocket, outlines the three kinds of money retirees should have available for enjoying the golden years with peace of mind.

• Red money

That which is tied to Wall Street is by far the most popular kind of investment and includes stocks, bonds and mutual funds.

“I’ve been looking at the accounts of new clients for nearly three decades, and on average, 92% of their retirement plan is based in these investments,” he says. “That’s risky, especially as you get closer to retirement age or once you retire. You don’t want 92% of your retirement premised on that kind of potential volatility.”

• Blue money

Often referred to as “alternative investments,” blue money typically includes Real Estate Trusts (REITS), equipment leasing programs, precious metals such as gold and silver, high grade rare coins and collectibles.

“This ‘color’ of money has been an important portion of the pie for success in my clients’ investments; they were essentially unaffected by our recent economic collapse because they were so well diversified,” Whipple explains.

This is a highly advantageous part of a portfolio because it historically creates good income with a low correlation to the stock market.

• Green money

These account come with a guarantee of some sort. They are either backed by the FDIC, the Legal Reserve System, which is supported by the insurance industry, or insurance companies themselves.

“Not all wealth is created equally, and this is the safest kind of money you can have in your retirement plan,” he says.

Green money includes investments in one’s portfolio that have guarantees to not lose one’s principal and, sometimes, one’s earnings.

“Investment in Wall Street should be much lower for those who are either retired or are about to be retired,” Whipple says. “Depending on a person’s age, a good investment portfolio could include about 36% red money, 32% blue money and 32% green money.”