Investment Strategies for Retirement

A major change in your life can be a good time to review your Investment strategies for retirement. This may include shifting your risk tolerance to a more conservative one. This may help protect your savings from market declines that can hurt your ability to meet retirement income goals.

As you get close to retirement, protecting your capital becomes just as important as growing it. That’s where investing in lower-risk investments such as bonds and dividend-paying stocks can come into play. These investments typically offer a ballast against stock market volatility, particularly in the early years of retirement when withdrawals are most likely to occur.

Investment Strategies for Retirement: Secure Your Future

Another concern is sequence of returns risk, the possibility that a sharp market downturn in your first few years of retirement could force you to withdraw assets at fire-sale prices. This could reduce the amount of future retirement income that your portfolio can generate, possibly jeopardizing long-term sustainability.

Having plenty of liquid assets such as cash and short-term bonds or bond ladders can help you withstand a setback. Adding more guaranteed income sources can also help you mitigate sequence of returns risk, such as an annuity or by delaying the age when you begin receiving Social Security benefits. The key is to develop and stick with a plan that aligns with your retirement goals and priorities. It’s also a good idea to review your plan with an advisor on a regular basis, at least quarterly or annually.