Retirement Rules Have Changed

In the July/August 2023 issue of Financial Advisor Magazine, Aaron Hodari, Chief Investment Officer at Schechter is quoted throughout the article, “Retirement Rules Have Changed.”  It discusses new ways retirees seek out income in a volatile market.

According to Hodari, dividing assets into specific buckets for expenses is impractical as it creates misalignment. Instead, advisors should consider the client's entire portfolio. Hodari emphasizes the importance of accounting for inflation and the need for a diversified portfolio beyond stocks that pay dividends. He states, "The 5% return you get today is going to buy less in 20 years, so you still need growth in a portfolio." He advises investors to be fully invested across dividend and growth stocks, including asset classes like high-yield private debt that can potentially offer returns of 9% to 12%.

Hodari also recognizes the appeal of real estate and suggests a combination of REITs and private property in client portfolios, with a focus on stabilized, multifamily developments that generate consistent cash flow over market cycles. He emphasizes the importance of long-term planning in retirement, especially with the increasing accessibility of alternative assets to retail investors through technology and product innovation.

Additionally, Hodari notes that advisors should consider legacy planning for clients who won't spend down all their assets in their lifetimes. Even a 90-year-old individual might choose to invest aggressively for the benefit of their heirs. Long-term planning is crucial to understanding the client's trajectory and making appropriate investment decisions.