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The Purposeful Portfolio™: The Cornerstone of a Confident Retirement

by BlogFinancial LiteracyInvestment PortfolioRetirement EducationWealth

For years, retirement planning has been framed as a quest for the perfect portfolio. The ideal asset allocation. The optimal withdrawal rate. The precise mix of stocks, bonds, and alternatives that will mathematically guarantee success.

But in my experience, perfection has never been the real driver of retirement confidence.

Purpose has.

Women don’t lose confidence in retirement because their portfolios are slightly sub-optimal. They lose confidence when their money doesn’t reflect how they actually live, what they value, or what they’re trying to protect. A portfolio can be technically sound and still fail if it doesn’t feel right to the person holding it.

Research shows that women tend to be less focused on relative portfolio performance and more focused on outcomes, whether their money will support their life, protect them from major setbacks, and align with what matters most to them.

Interestingly, this way of thinking is beginning to surface more broadly across the retirement industry. Recent commentary from Christine Benz, Director of Personal Finance and Retirement Planning at Morningstar, who was awarded the inaugural Realie Award for her blog on the value of a “good enough” portfolio echoes something I’ve believed for a long time: most people don’t need perfect portfolios. They need portfolios they can live with, and stick with.

That conviction and lots of research over the last ten years, is what led me to create Her Purposeful Portfolio™—a framework designed specifically for women who want their money to support not just longevity, but meaning, flexibility, and peace of mind.

The Problem With Chasing the “Perfect” Retirement Portfolio

Traditional retirement advice often assumes that better outcomes come from better math. More precision. More fine-tuning. More comparisons.

In reality, that approach often leads to:

  • Analysis paralysis
  • Ongoing second-guessing
  • Emotional decision-making during market stress
  • Plans that look great on paper but fall apart in real life

Christine Benz describes two common investor mindsets: maximizers, who endlessly seek the best possible option, and satisficers, who aim for a solution that is good enough to meet their goals.

Her insight is critical for retirees: the incremental gains from optimization are often outweighed by the stress, time, and behavioral mistakes that come with it.

In other words, a portfolio you can stick with often outperforms the one you abandon.

This idea often gets confused with the familiar saying “time in the market beats timing the market,” but it’s slightly different. Timing the market assumes people fail because they misjudge markets. Abandoning portfolios happens because people misjudge themselves. A plan can be mathematically sound and still fail if it doesn’t align with how someone actually experiences risk, uncertainty, and change. Time in the market only works if the portfolio fits the person holding it.

 

From “Good Enough” to Purposeful

A “good enough” portfolio is a powerful starting point.
A purposeful portfolio is what makes it sustainable.

The Purposeful Portfolio™ shifts the question from..
“What allocation is optimal?”
to
“What is my money meant to do for me?”

Traditional bucket strategies organize money by time horizon. The Purposeful Portfolio™ builds on that idea by organizing money around purpose, and how each piece is meant to feel.

Instead of organizing retirement assets solely by risk and return, the Purposeful Portfolio™ organizes money by function and feeling, because behavior, confidence, and clarity matter just as much as performance.

 

The Five Pillars of Her Purposeful Portfolio™

1. Security (SecureHER)

What it’s for:
Covering essentials and protecting the rest of the portfolio. This pillar is designed to fund non-negotiables like housing, food, insurance, and basic living expenses while also buffering against market volatility and sequence-of-returns risk, especially in the early years of retirement.

How it feels:
Calm. Reliable. Reassuring. Grounded.

Common tools:
FDIC-insured cash, high-yield savings accounts (HYSAs), money market funds, short-term bonds, T-Bills, and for some women, protected strategies such as fixed or fixed indexed annuities.

In retirement, cash held in an HYSA isn’t just an emergency fund, it becomes part of a Stability strategy that provides liquidity, smooths income, and reduces the need to sell long-term investments during market downturns.

For women who want additional protection, certain fixed or fixed indexed annuities can also play a role in this pillar. These strategies are often used as bond alternatives, offering principal protection with the potential for more upside than traditional bonds, and are frequently designed to create future income later in retirement, rather than immediately.

This pillar exists so the rest of the portfolio doesn’t have to carry emotional or timing risk. When essentials are protected and income pressure is reduced, long-term investments are given the space they need to do their job.

2. Flexibility (LiveHER)

What it’s for:
Travel, hobbies, experiences, spontaneity, and joy.

How it feels:
Free. Ready. Guilt-free.

Common tools:
Balanced funds, laddered CDs, dividend-focused ETFs.

Flexibility is often missing from traditional plans, especially for women who feel hesitant to spend. This pillar gives permission.

3. Wellness (HealthiHER)

What it’s for:
Healthcare, longevity risk, caregiving, and life’s “what-ifs.”

How it feels:
Protective. Grounded. Peace of mind.

Common tools:
HSAs, long-term care planning, health-focused assets.

This pillar acknowledges a reality many plans ignore: health is both a financial and emotional issue in retirement.

4. Growth (FutureHER)

What it’s for:
Long-term security, inflation protection, and future purchasing power.

How it feels:
Empowered. Energized. Strategic.

Common tools:
Equities, diversified index funds, REITs.

Growth doesn’t disappear in retirement, it just becomes more intentional.

5. Legacy (ImpactHER)

What it’s for:
Who—and what—you want to leave behind.

How it feels:
Intentional. Values-based. Enduring.

Common tools:
Trusts, beneficiary planning, donor-advised funds, ESG-aligned strategies.

Legacy isn’t just about inheritance. It’s about meaning.

 

Why This Framework Matters, Especially for Women?

Women tend to:

  • Live longer
  • Earn less over their lifetimes
  • Take on more caregiving responsibilities
  • Retire alone more often due to divorce or widowhood

The old rules of retirement planning were not built with these realities in mind.

The Purposeful Portfolio™ recognizes that retirement success is not just about accumulation, it’s about confidence, continuity, and clarity. It creates structure without rigidity and flexibility without chaos.

 

Where Her Retirement PersonaTM Fits In?

One reason a “good enough” portfolio works for some people—and fails for others—comes down to behavior.

At Her Retirement, we use the Her Retirement Persona™ framework to identify the patterns that shape how a woman thinks about money, risk, freedom, security and her retirement life. It’s not about labels. It’s about understanding how she makes decisions so her portfolio works with her instincts instead of against them.

For example:

  • A Security Seeker naturally emphasizes stability, predictability, and wellness planning.
  • An Adventurer tends to weight flexibility and growth more heavily to support experiences and freedom.
  • A Giver often prioritizes legacy, protection for loved ones, and impact beyond herself.

There is no single correct mix, only the mix that aligns with who she is and how she wants to live. When portfolio design reflects personality, confidence rises and second-guessing fades.

This is where purpose replaces perfection—and where personality comes before portfolio design.

 

The Real Goal: A Portfolio That Supports Your Life

Christine Benz’s work reminds us that retirement planning doesn’t need to be flawless to be effective. In fact, striving for flawlessness often undermines confidence.

Her Retirement’s concept of the Purposeful Portfolio™ builds on that insight by giving retirees a framework that is:

  • Understandable
  • Adaptable
  • Behaviorally realistic
  • Aligned with real life

Not perfect.
Not optimized to death.
But intentional, personal, and strong enough to support a long life well lived.

That’s what a good enough portfolio looks like…when it’s built with purpose.

 

A Purposeful Next Step

If you’re a woman who wants to build a portfolio that reflects who you are, not just what the market expects, one that balances protection, flexibility, growth, wellness, and impact, you don’t have to figure it out alone. We can help connect you with a retirement planner who understands purposeful, behavior-aligned planning for women.

If you’re a financial advisor who wants to build better, more meaningful portfolios for women (portfolios that account for personality, longevity, lifestyle, and real-life decision-making), we invite you to reach out to learn more about the Her Retirement Purposeful Portfolio™ and Retirement Persona™ framework.

Because retirement planning works best when it’s not just technically sound, but personally aligned.

Reach out to me, Lynn Toomey, founder and creator of Her Retirement and Her Purposeful Portfolio at: lynnt@herretirement.com.

 

Sources & Research

This article is informed by ongoing research and industry studies on women, investing behavior, and retirement confidence, including:

  • Fidelity Investments, Women & Investing Studies (various years)

  • UBS Global Wealth Management, Investor Watch reports

  • Vanguard, research on investor behavior and long-term outcomes

  • Global Financial Literacy Excellence Center (GFLEC), research on financial confidence and behavior

  • Morningstar research on retirement planning, investor behavior, and sustainable portfolio design

 

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De-Risking Your Portfolio

by BlogIncome DistributionIncome PlanningInvestment PortfolioWealth

Planning for retirement can be confusing and a bit scary. How do you manage your money now so you can be well-prepared financially for retirement? And how do you ensure that your retirement income will last throughout your life? How can you de-risk your portfolio to avoid the volatile markets like we’re seeing now (and will definitely see again). With increased life expectancies, it’s critical that you weigh all your options and plan carefully. This paper will discuss traditional retirement strategies, as well as introduce you to a less conventional, but potentially more effective and efficient approach to help you reach your retirement goals.

The Problem

Often, “the way we’ve always done it” is no longer the best way to achieve something. In retirement planning, a traditional portfolio uses only conventional stock and bond investments. In this paper, we refer to this as the Traditional Asset Allocation 6040 Portfolio (TRAA 6040). The problem? Traditional stocks and bonds on their own are not efficient for 100% of a retirement income portfolio. They expose a retiree to lower return potential and higher risk.

The Solution

Historically, stocks and bonds have been the mainstay of a typical retirement portfolio. The Hybrid Income Portfolio (HIP) offers a change in product allocation to reduce portfolio risk and increase the rate of return potential. The HIP strategy uses a combination of Traditional Investments (stocks & bonds), Structured Investment Products (SIPs) and Fixed Indexed Annuities (FIAs).

In addition to adding SIPs and FIAs, other strategies should be incorporated to lead to a more efficient retirement outcome, including:

 

  • Social Security Timing: Using the proper strategy to maximize this guaranteed income source
  • Tax Planning: Reducing taxes in retirement to increase the net after-tax income annually
  • Prudent Use of Home Equity: Incorporating HECM loans as a tax-free income source or portfolio safety net
  • Alpha Portfolio Management: Using active and passive portfolio management in the proper asset classes to add Manager Alpha to potentially increase returns. Manager Alpha is the rate of return an investment manager creates above or below the respective benchmark or index.

Read more in our white paper, A Portfolio for a Changing Economy

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Volatility: What’s the Best Defense?

by BlogIncome PlanningInvestment PortfolioRetirement IncomeRetirement Income PlanningWealth

Thoughts and ideas on the recent market losses and volatility due to the Coronavirus scare, and general economic and political uncertainty. Recent panic caused by the spread of the Coronavirus (COVID-19) has led to a stock market decline and has many investors feeling anxious. While portfolios will see ups and downs and this is a normal part of investing, the recent sell-off was sharp. It is in times like these that our team can best serve you by providing perspective on how we see these issues playing out.

The Best Defense is a Strong Offense
Nobody knows where the market is heading. Therefore, we believe that research and pro-actively planning, and implementing strategies that factor in potential significant drops in the market is critical. This is a strong offensive play in the world of portfolio planning (especially for those closing in on retirement). And what we consider to be the best defense to market volatility.

When the market heads up, and we get by this event-driven volatility, having a portfolio that has allocations to global equities to take advantage of market growth is critical. And if the market continues to fall, it’s critical to protect your principal with allocations to Fixed Indexed Annuities.

Either way, this “Hybrid Income Portfolio” strategy balances protection and growth, regardless of where the market heads. This is especially significant now, as equity prices are coming off all-time highs and bond prices are also high, as their yields have fallen to all-time lows. As we have seen recently, market conditions can change quickly in both directions.

For these reasons and more, we believe a Hybrid Income Portfolio to be a powerful alternative to other portfolio strategies. It’s also backed by academic research and has proven itself time and time again.*

The Impact on the Global Economy
Though the impact on human life is at the forefront of everyone’s concerns, there are many uncertainties surrounding the potential impact of the virus to the global economy. The global economy was already fragile from the nearly two-year-long U.S.-China trade war and the spreading virus will likely impact economic growth. While more equity market weakness is possible as the virus continues to grow globally, the downside could be limited as governments and global central banks have possible tools to combat the potential death toll and economic impact.

From the human life perspective, China took severe steps to limit the spread of the virus including forced quarantines, limited social contact, and significant population testing. We expect other inflicted nations to follow suit. From an economic perspective, global central banks including the People’s Bank of China and the Bank of Korea have already increased monetary stimulus or plan to do so. As we have seen in the U.S., and, specifically the U.S. housing market, over the past year, easing monetary policy can provide a potential economic stopgap. Furthermore, in the U.S., given unemployment levels near 50-year lows, the consumer, the driver of the current economic expansion, remains in good shape. We do expect market uncertainty to continue but downside may be limited. We also think the impact to markets will vary by sector. Sectors related to travel, such as cruise lines, airlines, and hotels are already taking a hit. Online entertainment companies and streaming services are performing better.

The team here at Retire Smart Network will continue to monitor and update information about our nation’s financial and physical health. If you’d like to discuss your portfolio strategy with a retirement planner or have a question about any retirement/financial topic, simply reach out and we’ll make it happen.

P.S. Don’t forget the Best Defense is a Strong Offense when it comes to protecting your health too…proper hand washing, eating right, getting enough sleep, avoiding sick people, stocking up on meds, food, water and household supplies, and having an attitude of positivity and gratefulness. Worrying about health or finances isn’t a productive use of time. Embrace optimism and reach out to us at any time.

*Sources:

  1. Morningstar Analysis, June 23, 2017, Snapshot Report.
  2. Roger G. Ibbotson, PhD Chairman & Chief Investment Officer, Zebra Capital Management, LLC Professor Emeritus of Finance, Yale School of Management Email: ZebraEdge@Zebracapital.com, Fixed Indexed Annuities: Consider the Alternative, January 2018.
  3. Shift Away from Potential Risk and Toward Potential Return, Nationwide (Morningstar), 06/16.

When Is 6% Versus 7% a Better Rate of Return???

by Income DistributionIncome PlanningRetirement IncomeRetirement Income Planning

When utilizing proper Gamma retirement planning strategies an investor can experience significant positive effect when taking income from their retirement portfolio.  Most advisors today don’t employ a Gamma-Optimized strategy

“When it comes to generating retirement income, investors arguably spend most time and effort on selecting ‘good’ investment fund/managers – the so called Alpha decision – as well as the asset allocation, or Beta decision. However, Alpha and Beta are just two elements of a myriad of important financial planning decisions for the average investor, many of which can have a far more significant impact on retirement income.”  -David Blanchette, CFA, CFP , Head of Retirement Research at Morningstar Investment Management and Paul Kaplan , Ph.D., CFA, director of research for Morningstar Canada

A research report written by David Blanchette, CFA, CFP, head of retirement research at Morningstar Investment Management and Paul Kaplan , Ph.D., CFA, director of research for Morningstar Canada entitled;  Alpha, Beta, and Now …Gamma, explains that most retirees and their advisors are still focused on Alpha and Beta planning strategies which focus solely on investment management decisions when developing a retirement income plan. Both Alpha and Beta are statistical portfolio measurements. Alpha (negative or positive) measures manager effect within the portfolio, while Beta measures the risk or volatility of an investment portfolio versus a representative benchmark. Their research and paper concluded that utilizing a new statistical measurement they call Gamma (the effect that different retirement planning variables have on a retirement income plan) can now be confidently utilized for retirement income planning. As they explain, “We estimate a retiree can expect to generate 22.6% more in certainty equivalent income utilizing a Gamma-Efficient retirement income strategy when compared to our base scenario (traditional investment strategy only: Alpha/Beta planning). This addition in certainty-equivalent income has the same impact on expected utility as an annual arithmetic return increase of 1.59%”.

This is certainly an eye opening conclusion to an extremely thorough and riveting research report on Retirement Income Planning that absolutely validates why Her Retirement’s pragmatic and research based approach to retirement income planning works so well. The difference is that Her Retirement has looked at the  research of Blanchette, Kaplan, Finke, Phau, and Milevsky, as well as many others over the years, and developed a pragmatic approach that incorporates many of the same principles and strategies for maximizing a retirees’ retirement outcome.

Volatility and Sequence of Return Risk Must Be Part of the Equation

As a quick reference, recent research has indicated that when a retiree begins to take income from their portfolio it’s imperative to reduce volatility in the portfolio in order to increase the portfolio’s survival rate. The evidence concludes that for any stated rate of return, the portfolio with the lowest volatility will survive the longest when taking income from the portfolio. On the converse, the portfolio with the highest volatility will suffer portfolio failure the quickest.  With this knowledge, we constructed a portfolio to statistically reduce risk, to the greatest extent possible, while offering the highest return for that risk. Our recommendation was to utilize a moderate portfolio consisting of 50% diversified stocks and a 50% position in Equity Index Annuities (EIAs) linked to various globally diversified indexes.

In addition, a major risk that must be calculated to assess its effect on a retirement projection is Sequence of Return Risk. This is the risk that a portfolio will suffer major losses in the early years of retirement. This event would be known as “negative” Sequence of Return Risk and would have a negative effect on the survival rate of the portfolio (i.e. the portfolio would have a much shorter lifespan and a retiree would run out of money far sooner). On the converse, there is “positive” Sequence of Return Risk where the portfolio has tremendous upside growth in the early years or retirement. In a positive sequence of return environment a retirement portfolio would experience much greater potential portfolio survival (i.e. the portfolio would last much longer while taking income from the portfolio).

An “average” Sequence of Return Risk is a market environment where there is average or lower overall volatility in the portfolio which would give the portfolio moderate survival ability while taking income from the portfolio.

In summary, depending on the market environment (negative, positive or average) what the retiree experiences early in their income phase will have a direct effect on the portfolio survival rate…even with identical portfolio returns over the long term.  A retirement income projection analysis must calculate the effect Sequence of Return Risk has on the long term survivability of a retirement portfolio. This will assure the highest probability of portfolio survival based upon the income strategy employed.

Based upon the below retirement projection, one can see how the practical application and effect  of a Gamma-Efficient retirement income strategy can have greater impact on income when compared to a traditional Alpha Beta strategy that is employed by most retirees and advisors today.  In this recently completed retirement projection for a new client we found the following:

After projecting the client’s traditional Alpha Beta retirement strategy (the “before” scenario), we reallocated the client’s current 80% diversified stock and 20% diversified bond portfolio to a more conservative allocation that would offer less return, but would dramatically reduce the portfolio’s volatility, while also offering reasonable growth potential.  The client’s retirement projection variable was reset to the “new” reallocated portfolio and the results of the “before and after” are quite compelling.

The Results Speak for Themselves

The retirement projection assumptions utilized for this analysis were as follows:

Rate of Return Estimates –
Global Stock Portfolio @ 8% net
Global Bond Portfolio @ 3% net
Equity Index Annuity @ 4% net

Current Portfolio at 80% global stocks and 20% bonds = 7% melded return estimate (net)
Proposed Portfolio at 50% global stocks and 50% EIAs = 6% melded return estimate (net)

Additional Assumptions –

The client is currently 53 years old and preparing to retire at age 62 with a net retirement income need of $5,000 per month. We inflated her income needs at a 3% adjustment per year beginning immediately in the projection.  Her current portfolio is valued at $450,107. She also has a small pension that will begin at age 65 paying her $11,124 annually. As well, the client will begin taking Social Security income at age 62 in the amount of $2,473 per month with a 2% cost of living pay increase per year. The client also has $25,000 per year rental income. We increased the rental property income at 1% cost of living adjustment. The analysis will also assume a marginal tax rate of 17%.

All these assumptions and variables were entered into our Retirement Income Projection Analysis (RIPA) system and here are the results:

The Results – Results presented on both a negative and average Sequence of Return environment

Negative Sequence:
Current Scenario – Age 90 Client Runs Out of Money
Proposed Scenario – Age 90 Client has $818,887

Average Sequence:
Current Scenario – Age 95 Client has $1,355,620
Proposed Scenario – Age 95 Client has $1,625,598

As we see by the above results, it’s imperative to develop a strategy that will utilize risk reducing investment vehicles to assure an income portfolio’s survival over the long term. Traditional stock and bond growth strategies employed by most are not enough. A Gamma-Efficient portfolio strategy must be utilized to assure the highest probability of portfolio survival.

Why 6% is better than 7%?

A new paradigm needs a new strategy:  growth vs. income planning; Alpha Beta planning vs. Alpha Beta and Gamma strategies to generate a better retirement outcome.

As Blanchette & Kaplan explain, “Alpha and Beta are at the heart of traditional performance analysis; however, as we demonstrate, they are just one of the many important financial planning decisions, such as savings and withdrawal strategies, that can have a substantial impact on the retirement outcome for an investor.”

The above “current vs. proposed” is a very real and very typical scenario with many retirees. In most, if not all cases, the results will be the same… math is math and there’s really not much debate in how numbers calculate. This is an important and valuable outcome scenario where a combined stock and equity index annuity portfolio (generating a 6% return) is clearly better than a stock and bond portfolio (with a 7% return).

We have witnessed clients that are “annuity phobic” due to all the media’s misinformation and hype, as well as the all stock proponents who wrongfully claim that all annuities are too expensive.  We’ve also witnessed clients that are “stock phobic” due to more rhetoric about how one can lose all their money in the stock market and stocks are no place for retirees to invest due to the risk. We purport that the best approach is a combination approach (based on research and factual numbers, not hearsay).

We also suggest several additional Gamma strategies/products to further increase the portfolio’s life expectancy:

Single Premium Immediate Annuities (SPIAs)
Dynamic Withdrawal vs. Traditional Static Withdrawal
Sound Social Security planning with sophisticated Social Security timing software

At Her Retirement we focus on the same five important financial planning decisions/techniques as suggested by Blanchette & Kaplan’s Alpha, Beta and now…Gamma research:

1) A total wealth framework to determine the optimal asset allocation
2) A dynamic withdrawal strategy
3) Guaranteed income products (i.e., annuities)
4) Tax efficient allocation decisions
5) Portfolio optimization that includes a proxy for the investor’s implicit and/or explicit liabilities

“We believe retirees deserve an investment and income planning experience that is founded on long-term, research and evidence-based results NOT rhetoric.  And we’re committed to providing this for them.” -Her Retirement