Staying Invested When Work Stops
Your portfolio still needs to grow after you stop working.
What This Means
What happens if I lock in my income the day I retire?
It may feel safe today, but it can create problems later.
Let’s say you retire needing $100,000 per year and decide to lock that income in using CDs, bonds, annuities, or other fixed-income investments.
The problem is that your income may stay the same while your expenses continue to rise.
Even if your lifestyle doesn’t change, inflation means it will likely cost more to maintain that same lifestyle 10, 20, or 30 years from now.
That’s why I don’t believe retirement means you should stop investing for growth.
Having cash reserves or bonds available to fund near-term withdrawals can help you avoid selling stocks when the market is down. But that doesn’t mean your entire portfolio needs to become conservative.
The money you won’t need for a long time still has a job to do.
It needs to grow.
Retirement can last decades. Your portfolio needs to provide income today while also helping that income keep pace with your future expenses.
The goal isn’t to eliminate market risk when you retire. It’s to have a plan for getting through market declines while keeping enough of your portfolio invested for long-term growth.
Common Questions
Should I stay invested after I retire?
Yes. Retirement doesn’t mean you no longer need growth. Your retirement could last 20 or 30 years or longer, so keeping a good portion of your portfolio invested can help your money keep pace with rising expenses over time.
Why not move everything to bonds when I retire?
Having cash reserves or bonds available for near-term withdrawals can give you another place to take income when stocks are down
How can I avoid selling stocks when the market is down?
Is guaranteed retirement income a bad thing?
Remember This:
Your paycheck may stop. Your portfolio still needs to grow.