‘I am at a loss.’ I’m a 68-year-old widow with $3,200 per month in Social Security and $2.6 million saved. My adviser has me in over 50% equities and tells me to stay the course. Is that wise? (2024)

My financial adviser said I’m in great shape and will have enough to last the rest of my life, but my portfolio is over 50% in equities, which doesn’t seem wise. When I raise the issue with my adviser (a fiduciary who gets a percentage to manage my funds), he advises me to stay the course, and not pull out of the market. He has started withdrawing from my 401(k)s to ease the overall tax burden, but this year it put my income over $200,000, which resulted in a higher tax bill. It’s not really additional income as it was moving those investments to a Roth IRA.

My husband was the financial guru and I am at a loss. Does this seem like a decent financial course for me, or should I seek someone else’s advice? (Looking for a new financial adviser too?This free tool can match you to an adviser who may meet your needs.)

Answer: You’re right to be asking questions, and there are some potential red flags here. The first is your high percentage of equities. “Over 50% in equities at your age raises eyebrows,” says Blaine Thiederman, a certified financial planner at Progress Wealth Management. “While equities offer growth, they also come with volatility. Given your portfolio has already decreased by 20% in the last year, a more conservative approach may be warranted. If you were a client of mine, I’d likely review your financial plan with you and how affordable your future looks.”

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You may want to ask your adviser if you need to have money in stocks at all to provide long-term growth, says Cristina Guglielmetti, a certified financial planner at Future Perfect Planning. That said, the equities allocation may be OK. “Sixty eight is not old and the money needs to last,” says Guglielmetti. “Does Social Security cover most expenses or is the portfolio providing some of that? Have the annuities been annuitized, meaning, have they been converted to a guaranteed stream of income and if not, is the plan for that to happen?”

As for your 20% loss, while concerning —you’re not alone, says Guglielmetti. “Last year was definitely a down year for everyone,” Guglielmetti says. “A one-year trend simply doesn’t provide nearly enough stable data to evaluate the performance of any investment strategy.”

In other words, don’t panic and pull your money out. “We know that a well-diversified portfolio does well over the long term and sometimes you have to block out the short-term noise,” says Brenda Knox, a certified financial planner at Financial ElementsStill. “You need to have a conversation with your adviser to make sure you’re on the same page.”

Many people in their 60s have fixed annuities to guarantee the payment of their bills. “While these aren’t appropriate for everyone, it sounds like you’d prefer to have a guaranteed source of income to help pay your bills,” says Thiederman.

The higher tax bill is also a point you’ll want to explore further. “The high tax bill this year is a red flag that your current strategy may need tweaking,” says Thiederman.

To fully understand what’s happening with your accounts, experts say it’s key to know how much was in your retirement accounts versus taxable accounts, who your heirs are for estate planning purposes and your overall goals to determine how much it makes sense to convert a Roth IRA.

“The idea of converting pre-tax traditional IRA dollars to a Roth IRA to leverage the lower tax brackets makes complete sense” says Bruce Primeau, a certified financial planner at Summit Wealth Advocates. “The key to this strategy is the lower tax brackets and if the conversion is pushing you above the 24% federal tax bracket, it may not be a great idea.”

Knowing all this, the first step you may want to do is go back to your adviser and have them review the big picture with you. “Reviewing the overall long-term plan from a tax perspective rather than just a year-by-year tax minimization approach is a big part of what I do for my own clients,” says Knox. It’s also a good idea to discuss your financial goals and what your adviser’s plan is for helping you meet them.

“I’d recommend getting a second opinion but look for someone who is not only a fiduciary, but has expertise in planning, specifically tax, estate and retirement planning,” Marianela Collado, a certified financial planner at Tobias Financial Advisors.(Looking for a new financial adviser too?This free tool can match you to an adviser who may meet your needs.)

Certified financial planner James Daniel at The Advisory Firm says a fee-only planner could help you figure out the rate of return you need for a successful retirement. “Once you know that, then addressing the stock and bond allocations will make more sense,” says Daniel. To ensure you get the most out of your financial planning relationship, MarketWatch Picks highlights 8 questions you should ask your financial adviser.

Whatever adviser you choose, you might also want to discuss what the plan will be for the rest of your money. “Is there a legacy? If so, I’d present it as a bucketing strategy, where your short term money is in liquid, safe instruments like short term Treasury bills, there’s a medium-term bucket expected to remain in place for five to 10 years and a long-term bucket for things beyond that timeframe for riskier assets. That way, the money you need to support yourself isn’t at risk of market loss but you’ll still benefit from long-term growth,” says Guglielmetti.

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