09/01/2026
Bonds are not a risk-free investment.
No investment is "safe".
Every financial instrument has a risk.
Bonds can have:
• Interest rate risk (remember 2022?)
• Credit risk
• Inflation risk
• Reinvestment risk
The cookie-cutter "advice" is to put more toward bonds as you get older and move into retirement.
On the surface, that makes sense, but it's a bit more nuanced.
There are different types of bonds:
• US Government
• Foreign Government
• Corporate (Investment Grade)
• Junk Bonds
• Municipal
• Inflation Protected (TIPS)
But don't stop there. Then there is:
• Short duration
• Intermediate duration
• Long duration
Just going with a 60/40 or a 50/50 portfolio may not match your specific situation.
Bonds need to support your cash flow needs in retirement, help with volatility, and be a potential diversifier.
Different bonds serve different purposes.
📝 𝐀𝐬 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐫𝐞𝐭𝐢𝐫𝐞𝐦𝐞𝐧𝐭 𝐩𝐥𝐚𝐧:
1️⃣ Map out your monthly expenses.
How much of your monthly expenses are covered by guaranteed income such as Social Security?
How much is not? (That's the gap your portfolio needs to cover)
2️⃣ Map out the gap for the next 5 years. (a 5-year 𝐫𝐨𝐥𝐥𝐢𝐧𝐠 cash flow projection)
3️⃣ Then use bonds that align with your 5-year needs. That's where duration and type of bond come into play. Don't just pick an "all-inclusive" bond fund. Those are not aligned with your cash flow needs.
⚠️ Cash Flow Planning is one of the most critical components of your retirement plan. It is how you plan for your desired lifestyle, which then drives how you structure your investment portfolio, including how much and what type of bonds. You then review it regularly as you monitor your cash flow, inflation, markets, and overall retirement plan.
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🗓️ If you are within 5 years of retirement, or already retired, and need help with your retirement planning, set up a call via the website. The first two meetings are complimentary.
For informational purposes only. Consult with a financial professional.
