Best Robo-Advisor for Retirees

You have just retired or are planning to retire soon.

Your focus now is on cash-flow, not so much on earnings. You just need to make sure you have enough to get you through the next 30 years without a paycheck coming in.

The good news is, if you invest with the right robo advisor, you don’t have to bother with any complicated investment decisions when you’re retired.

Best Robo Advisors for Retirees – My Top 3 Picks

Robo-advisors aren’t just for millennials – retirees benefit too. In fact, it’s almost more important for retirees to take advantage of this great investing service.

Which robo-advisor is right for you? Check out my favorites below.

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1. Personal Capital – Best overall

Personal Capital takes the cake for best robo-advisor for retirees. It offers the perfect combination of digital advisor and human advisor, not to mention its holistic approach to investing that is personalized, rather than generalized.

Features

• Personal financial analysis – Personal Capital looks at more than your investments. They help you look at the big picture. Are you worried about overspending during retirement? Personal Capital will help you see where you overspend, what you can change, and of course, how you can structure your investments based on your risk tolerance.
• Access to personal financial advisors – This is something that sets Personal Capital apart from all others. Everyone has access to a team of financial advisors for human advice. If you have more than $200,000 invested get two dedicated financial advisors.
• You need a minimum of $100,000 invested – Retirees should have a lot more than $100,000, so this shouldn’t be hard to achieve
• Access to many account types – You can open retirement accounts, non-retirement accounts, trusts, and even a cash account

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2. FutureAdvisor

FutureAdvisor offers free retirement planning and account management, which is great for retirees trying to maximize their funds during retirement.

FutureAdvisor advises on TD Ameritrade and Fidelity accounts, so if you don’t have a brokerage account there, you must open one.

Features

• ETF expense ratios from 0.14% to 0.18% – These low-cost ETFs help retirees make the most of their investments. You want to keep your portfolio conservative, but still growing and with low-cost ETFs, that’s possible.
• Manages all accounts – FutureAdvisor oversees taxable and retirement accounts, helping you figure out the best way to maximize your income while you aren’t working and need to ensure you have enough funds for the rest of your life.
• Tax-loss harvesting – It’s even more important to keep your tax liabilities low when you’re retired, as you need every penny you can keep during this time.
• Human advisors – Get access to human advisors during regular business hours, which can be great to help maximize your savings and spending during retirement

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3. Wealthfront

New and experienced investors love Wealthfront’s many benefits and low management fee.

You only need $500 to get started and they charge just 0.25% of assets under management for this automated robo-advisor service.

Features

• ETF management fees of just 0.08% – Keeping your fees to a minimum is important right now when you’re not earning money and rely on your investments.
• Manage a variety of accounts – Whether you have taxable or retirement accounts, Wealthfront manages them all, helping you to maximize your income.
• Daily tax-loss harvesting – Why pay more taxes than necessary, especially during retirement? Wealthfront automatically looks for tax-loss harvesting opportunities to save you money.
• Automatic rebalancing – If your portfolio starts going the wrong direction, Wealthfront automatically rebalances it for you.

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Alternatives

Vanguard

If you have $50,000 or more in an investment account, Vanguard is a great option. This hybrid robo-advisor offers the best of both worlds between human advice and automated investing.

A player in the industry already, Vanguard has quite a following, but its robo-advisor is somewhat new and suitable for many investors.

Features

• Access to a team of financial advisors – Get help with Social Security optimization, best use of your retirement funds, or investment advice.
• Customizable portfolio construction – This isn’t a one-size-fits-all approach. Vanguard customizes your portfolio based on the advisor’s thoughts and the information you provide.
• Open any type of account – Vanguard offers taxable, retirement, and trust accounts.
• Access to customer service reps – You can talk to a rep Monday – Friday from 8 AM to 8 PM.

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Acorns

It started as the ‘spare change’ investor, but today, Acorns offers many features. It’s a robo-advisor/automated saving tool that retirees can use to their advantage.

Whether you’re still working on your nest egg or you have a nice nest egg built and just want a simple tool to keep it strong, Acorns is a great tool.

Features

• Round up your purchases – It’s never too late to round up your purchases to keep investing. During retirement, you still need to grow your earnings, so why not automate it?
• Low ETF expense ratios – It costs just 0.03% – 0.18% for ETF expense ratios, which saves you money on expenses.
• 7 ETFs to choose from – While it’s not a lot, it keeps things simple and Acorns offers five portfolio options
• Taxable and retirement accounts – You can open a taxable account and an IRA or Roth IRA

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Betterment

Betterment offers two services, Betterment Digital and Betterment Premium. The Digital program is for those with less than $100,000 invested, and the premium is for investors with more than $100,000 invested.

The fee is higher on the premium account, but you get more benefits.

Features

• Low ETF expense ratios – Betterment offers ETF expense ratios from 0.07% – 0.17%.
• 12 asset classes – Choose from a large number of asset classes to help diversify your risk and reach your goals.
• Offers many options – From socially responsible investing to smart beta investing, Betterment offers all of it, giving you options.
• Open any type of account – Retirement accounts, taxable accounts, trusts, and cash accounts are all acceptable.

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United Income

United Income was created with retirees in mind. Their methods and decisions are all very retiree-focused.

They look not only at investments but at financial planning too, as that’s an important aspect for retirees.

Features

• Account sequencing – Prioritizes which accounts you should spend from while maintaining your investments in others to keep your earnings growing during this crucial time
• Personalized budgeting recommendations – During this ‘new’ time in  your life, you have to revamp your budget and United Income helps you do it
• Plan your legacy – If you plan to leave behind a legacy, United Income helps you plan accordingly
• Social Security advice – Learn how to maximize your benefit and make the most of the funds with the Social Security income advice that comes with every account.

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[Bonus] SigFig

Best if you don’t want to move your funds to a different platform

If you don’t want to move your investments, but want the advice of a robo-advisor, check out SigFig. It works only with third-party brokerage platforms, namely Charles Schwab and Fidelity. The idea is to maximize your portfolio while leaving it where it is to avoid unnecessary fees.

You can choose the free Portfolio Tracker that tracks all of your investments in one place or the Asset Management Plan that balances and diversifies your investments, to increase your earnings. This service is free up to $10,000 invested and then 0.25% per year beyond $10,000 in investments.

SigFig gives advice on how to maximize your portfolio for the greatest results during retirement.

Do you really need a robo advisor for your retirement?

If you want advice to maximize your earnings and decrease your costs, don’t give up on robo-advisors just because you’re retired. Sure, they seem like they’re made just for millennials with the new technology and all the bells and whistles, but there are plenty of benefits for retirees too.

Honestly, where else can you get professional-grade investment advice for a fraction of what human advisors cost? Why spend an arm and a leg on a human advisor when you could manage the investments yourself with the help of a robo-advisor?

Thanks to the low overhead and automated processes, you can pay minimal fees, and yet have professional advice on how to reach your retirement goals. It’s no secret that life really changes once you retire and I’m talking financially. Rather than getting slapped in the face with the new money issues, have a robo-advisor on your side, helping you make the most of this time you’ve worked so hard to have feel financially free.

How Robo Advisors Manage a Retiree’s Portfolio

As you hit retirement, your portfolios need to change. No longer are you relying on the aggressiveness of a stock portfolio. It’s no longer about growth, but about keeping what you earned. If you stay in a heavy stock portfolio, you risk a lot – you could even risk it all. Does that make sense?

Robo-advisors change your portfolio to a more conservative, bond-heavy portfolio.

Just please make sure your risk tolerance reflects the fact that you’re retired, and the robo-advisor does the rest for you.

The difference in portfolios retirees vs non-retirees

As I said above, it’s about being conservative when you’re a retiree and robo-advisors understand that. You’ll move from a stock portfolio to a mostly bond portfolio. Don’t worry, you’ll still have earnings, they just won’t be as large. But the better news is that you won’t have losses. When you focus mostly on bonds, you get an almost guaranteed return.

Because your focus is on cash flow and not growth, you’ll focus on not losing money in your portfolio. Hopefully, by this point, you’ve accumulated enough earnings that you can live off of it and the minimal growth it will make in a more conservative portfolio.

Pros and Cons of a robo-advisor for retirees

Pros

• You get a hands-off approach to investing
• The portfolio automatically adjusts for you based on  your new risk tolerance
• You take advantage of tax-loss harvesting techniques
• The fees are low compared to a human advisor
• You don’t need a specific balance for most robo-advisors
• You get tailored advice, sometimes even from a human advisor

Cons

• You can’t get involved in the investments if you want to (some people prefer to)
• You pay a percentage of your assets under management
• You go from an aggressive portfolio to a conservative portfolio whether you want to or not

FAQ

Are robo-advisors good for retirees?

Robo-advisors are experts at assessing risk and telling how much you can risk, spend, and need to earn to reach your goals. While it seems like more of a feature for those approaching retirement, it’s also great for retirees.

How should you choose a robo-advisor?

Choose the robo-advisor that offers the services you need and the prices you can afford. Don’t focus on price alone, but also on the features. Does the robo-advisor offer tax-loss harvesting? What about automatic rebalancing or access to a human advisor? Make sure the robo-advisor has everything you need.

Can you lose money with a robo-advisor?

Yes, you can lose money with a robo-advisor, just like you can with any investment. While they diversify your investments, there’s nothing saying that you won’t lose some money at some point. Make sure you choose the right portfolio and choose a robo-advisor that automatically rebalances your account.

Do robo-advisors beat the market?

No, robo-advisors generally try to mimic the market but not beat it. Unless you invest in a robo-advisor that uses smart beta techniques, but those advisors typically have high minimum balance requirements.

What are the top advantages of using a robo-advisor?

Robo-advisors offer a variety of benefits including:

• Low costs (usually a percentage of assets under management)
• Offers tax-efficient investments
• Automatically rebalances your portfolios
• Ensures your portfolio coincides with your goals and risk tolerance

Which Robo Advisor is Best for Retirees?

So which robo-advisor is best for retirees like yourself? I suggest Personal Capital. It offers the best of both worlds, giving you room for DIY investing with automated investing. You get the bonus of personal finance advice, ensuring that you stay within your guidelines while maximizing your retirement income.

Summary

I like Personal Capital, the platform is truly the best allrounder. Especially if you are a little bit more involved with investing. However if you are the hands-off type investor there are a ton of other choices out there.

Please don’t hesitate to ask any questions and feel free to share your experience with any of the services I wrote about.