Retirement investing strategies
Retirement Planning

Retirement investing strategies

Table of Contents




Planning for retirement can seem daunting, but following some key retirement investing strategies can help ensure you are financially prepared when you decide to stop working. Here are some of the most important things to consider as you plan your retirement investing strategies.

Set Clear Goals

The first step in developing your retirement investing strategies is to have a clear understanding of your retirement goals. Consider questions such as:

  • At what age do you plan to retire?
  • Where do you hope to live in retirement? Will you downsize or move locations?
  • What is your desired monthly income in retirement?
  • What big-ticket expenses like travel or healthcare do you anticipate in retirement?

Having clear goals will allow you to estimate how much money you need to save and what return you’ll require on your investments to generate your desired income.

Take Advantage of Retirement Accounts

One of the keys to any successful retirement investing strategy is taking full advantage of dedicated retirement accounts like 401(k)s and IRAs. Here are some of the benefits these accounts offer:

  • Tax-deferred growth: You don’t pay taxes on any investment gains in the account until you withdraw money in retirement. This allows more of your money to grow each year.
  • Tax-free growth: With a Roth IRA or Roth 401(k), you don’t pay any taxes on gains if rules are followed.
  • Employer match: Many 401(k)s come with employer matching funds, which is free money you don’t want to miss out on.
  • Higher contribution limits: You can contribute more pre-tax or Roth dollars to these accounts compared to regular investment accounts.

Max out any available employer match first, then aim to contribute up to the annual IRA and 401(k) limits if possible. This will accelerate your retirement investing strategies.

Invest with Your Time Horizon in Mind

Your asset allocation is a key part of your retirement investing strategies. Asset allocation refers to what percentage of your portfolio is invested in different asset classes, like stocks, bonds and cash.

When retirement is still many years away, your portfolio typically invests primarily in stocks. As you near retirement, it shifts more to bonds and cash to preserve capital.

Years to Retirement Stock Allocation Bond Allocation
>20 years 80-90% 10-20%
10-20 years 70-80% 20-30%
5-10 years 50-60% 40-50%
0-5 years 30-50% 50-70%

Rebalance your portfolio about once a year to maintain your target asset allocation. This helps manage your risk as you near retirement.

Consider Income Investments

One of the biggest challenges in retirement is generating steady income from your savings to live on. Some good income investments to consider include:

  • Dividend stocks: Companies that consistently pay dividends can provide retirement income.
  • Bond funds: Government and corporate bond funds pay interest income.
  • Annuities: These insurance products pay out fixed or variable income streams.
  • Rental property: Income property can complement a stock/bond portfolio.

Aim to have enough income investments to cover basic living expenses in retirement. The rest of your portfolio can remain invested for growth.

Work with a Retirement Planner

A financial advisor who specializes in retirement planning can be a big help in developing and executing your retirement investing strategies. Some key ways they can assist include:

  • Creating a customized plan based on your specific goals.
  • Recommending an ideal asset allocation and investments.
  • Determining the best order to tap accounts to maximize longevity of your portfolio.
  • Adjusting your plan as life circumstances change.

Look for a certified financial planner (CFP) with extensive experience specifically with retirement planning.

Maintain a Cash Reserve

It’s wise to keep 1-2 years of living expenses in a cash reserve account like a money market fund when you retire. This provides a cushion so you don’t have to sell investments at an inopportune time if the market is down. It also allows you to wait out periods of volatility.

Make sure your cash reserve is included in your overall asset allocation. For example, if stocks are 60% of your portfolio, only 40% should be invested in the market. The remainder can be cash.

Also Read:


Plan for Healthcare and Long-Term Care

Two major retirement related expenses are healthcare and potential long-term care needs. Have a strategy to pay for these costs:

  • Evaluate Medicare and Medigap plans as you age into eligibility.
  • Consider purchasing long-term care insurance by your mid-50s.
  • Invest in a Health Savings Account (HSA) if eligible.

Don’t neglect to factor these expenses into your overall retirement investing strategies.

Create a Drawdown Strategy

You’ve spent years saving for retirement. Now you need a smart strategy to draw down your investments. Some tips include:

  • Withdraw a fixed percentage of your portfolio each year, say 3-4%.
  • Move portfolio assets into income-focused investments five years before retirement.
  • Draw from your taxable investment accounts first to allow continued growth in retirement accounts.
  • Consult with your advisor regularly to adjust your strategy as needed.

Following a disciplined drawdown approach helps ensure you don’t run out of money in your later retirement years.

Remain Flexible

Life will happen after you retire. Be prepared to adjust your retirement investing strategies accordingly. For example:

  • You may realize your essential costs are lower than expected and you can withdraw less.
  • A major health issue can increase expenses.
  • Adult children might need support.
  • You may have the opportunity to realize a lifelong dream.

Run scenarios with your financial advisor periodically to keep your plan nimble.


Following these important retirement investing strategies can help set you on the path to retiring comfortably:

  • Set clear retirement goals.
  • Maximize dedicated retirement accounts.
  • Invest wisely for your time horizon.
  • Generate retirement income.
  • Work with a professional.
  • Maintain a cash reserve.
  • Plan for healthcare costs.
  • Utilize a drawdown strategy.
  • Stay flexible.

Retirement planning is an ongoing process. The sooner you develop smart retirement investing strategies, the more prepared you’ll be when that next chapter of life arrives.



Leave a Reply

Your email address will not be published. Required fields are marked *