Investing takes patience, discipline, and a strong stomach occasionally. This is especially true for pre-retirees and retirees, where managing risk is just as important as seeking growth.

Also, retiring in California comes with its own set of financial challenges. One important key to thriving in your golden years is a smart, well-diversified investment portfolio that keeps your finances stable and your future secure.

At Bulman Wealth Group, we’re a team of experienced financial advisors with a fiduciary duty in California, offering complete financial solutions in one place. Our mission is to help you pursue your dream retirement. 

This article covers key strategies for building a diversified portfolio, important considerations for retirement planning in California, and additional planning tips.

The Importance of Diversification in Retirement Planning

As you approach retirement, your appetite for risk often shifts. Market declines can be more harmful because more is at stake. If your assets are tied up in illiquid investments like real estate or concentrated in a single stock or sector, setbacks can impact your retirement plans. Diversification is key to managing these risks.

Why Diversification Matters

A well-diversified portfolio helps to:

• Reduce volatility: Spreading investments across asset classes can lower overall portfolio risk.
• Mitigate sequence risk: If market downturns happen early in retirement, diversified assets can help cushion losses.
• Provide liquidity: A mix of liquid and illiquid assets helps prevent financial strain when withdrawals are needed.

Key Asset Classes for Retirement Portfolios

A diversified portfolio spreads investments across multiple asset classes to balance risk and growth. Here are options to consider.

Stocks: Growth Potential With Market Fluctuations

Stocks offer long-term growth but come with volatility. A mix of different types can help manage risk:

• Large-cap stocks – Stable, established companies with steady earnings.
• Mid- and small-cap stocks – Higher growth potential but increased volatility.
• Global stocks – Exposure to markets outside the U.S. for added diversification.

Bonds: Stability and Income

Bonds provide steady income and reduce market fluctuations:

• Government bonds – Lower risk, backed by the U.S. government.
• Corporate bonds – Higher yields but varying risk levels.
• Municipal bonds – Tax-advantaged for retirees in high-tax states like California.
• Short- vs. long-term bonds – Short-term bonds offer stability, while long-term bonds provide higher yields.

Investment Styles: Growth vs. Value Investing

• Growth investing – Focuses on high-growth companies, often in tech sectors.
• Value investing – Targets undervalued companies for long-term stability.

Choosing the right mix depends on your goals, risk tolerance, and time horizon.

The Role of Rebalancing

Markets change, which can shift your asset allocation over time. Rebalancing helps keep your investments aligned with your goals. For instance, if growth investments increase significantly, rebalancing reduces exposure to riskier assets and maintains the right balance for retirement.

Diversification is not about eliminating risk—it’s about managing it effectively. Whether you’re looking for a Roseville, CA, financial advisor or a financial advisor in Temecula, Bulman’s team is here to provide guidance on structuring a portfolio that fits your objectives.

Retirement Planning Considerations Specific to California

Planning for retirement in California requires careful attention to costs, taxes, and income strategies. The state’s higher expenses and tax structure can significantly impact financial plans.

High Cost of Living

California’s high living costs can strain retirement income, making thoughtful planning vital. Key steps include:  

• Estimating essential expenses like utilities, food, and gas to determine income needs.  
• Consider downsizing, relocating, or adjusting your lifestyle to manage costs.  
• Developing a withdrawal strategy to sustain savings while accounting for inflation.

State Income Tax

California taxes most types of retirement income, including 401(k), IRA, and pension withdrawals, making RMD tax strategies essential for income planning. To lower this tax burden, consider using Roth accounts, as qualified withdrawals are not taxed by the state. You can also spread out your withdrawals to avoid tax spikes or invest in tax-efficient stocks and bonds to take advantage of state tax benefits.

Property Taxes

Property taxes in California are limited by Proposition 13, but they can still impact retirement budgets, especially after property transfers or new construction. While long-term homeowners benefit from lower assessed values, retirees should be aware that gifting or inheriting property often leads to a reassessment of market value.

Bulman Wealth Group can help you evaluate retirement tax benefits in California and develop RMD withdrawal strategies that work best for you.

Key Retirement Planning Strategies for Californians

Beyond investment choices, managing income sources and expenses plays a key role in long-term security.

Social Security Strategies

When and how you claim Social Security can greatly affect your lifetime benefits. For example, delaying your claim until full retirement age—or later—can increase your monthly payments. If you’re married, you should also look into spousal and survivor benefits, which could provide extra financial support.

Since every situation differs, a Bulman financial advisor in California can help evaluate potential strategies for maximizing benefits.

Medicare and Healthcare Costs

Medicare provides broad coverage but doesn’t cover everything. Gaps include no coverage for dental, vision, hearing aids, or long-term care. Medigap and Medicare Advantage plans can help with extra costs but come with their own fees and limits. Long-term care in California, like nursing homes or in-home care, is costly, so consider options like long-term care insurance.

Estate and Legacy Planning

A solid estate plan protects your assets and ensures your wealth is distributed as you wish.

Key points include:  

• Trusts – Living trusts avoid probate, manage asset distribution, and reduce estate taxes.  
• Beneficiaries – Keeping retirement accounts and insurance beneficiaries updated avoids issues.  
• Gifting and charitable giving – Strategic gifts or donations can reduce taxes while passing on wealth.

Bulman Wealth Group’s wealth management and legacy planning team can help you create a plan that aligns with your financial priorities and legacy goals.

About Bulman Wealth Group

With decades of experience, our team provides strategic financial planning tailored to Californians. Our services cover:

• Retirement income planning – Managing Social Security, pensions, and investment withdrawals.

• Investment management – Crafting diversified portfolios suited to individual needs.

• Tax planning – Helping minimize tax burdens while maintaining long-term financial health.

• Healthcare planning – Preparing for future medical expenses and care needs.

• Estate and legacy planning – Creating plans that preserve wealth and support future generations.

Interested in working together or have questions? Schedule a consultation today.