You worked hard your entire life and are finally ready to sit back, relax, and live off your retirement savings. But before you go looking for the perfect beach chair, it may be worth reviewing your investment strategy.
Why? Because investing after retirement is different from investing while you were working. The right approach can help your savings last longer.
Investing After Retirement: The Whys & Hows
Once you retire, you may want to take a more conservative approach with your savings. This often means keeping more money in lower-risk options and less in higher-risk investments. If the market drops after you retire, you may not have as much time to recover. You also may not have a paycheck to replace losses.
That said, you do not have to stop investing altogether. Retirement is no longer tied to age 65. Many Americans continue working into their late 60s and beyond. At the same time, people are living longer, which means your savings may need to last 30 years or more.1
Lower-risk options like cash and certificates of deposit (CDs) can help preserve savings, but they typically offer lower returns. You may still need some growth to support long-term needs.
Reasons Why Investing May Still Matter
- To help your savings last longer: Longer lifespans mean your money may need to support you for decades.
- To keep up with inflation: For the 12 months ended February 2026, the annual U.S. inflation rate was 2.4%.²
If your money grows too slowly, rising prices can reduce your purchasing power. - To support additional goals: Investment growth may provide extra income for travel, charitable giving or leaving money to family.
Understanding Risk and Return
Lower-risk options, such as cash and certificates of deposit (CDs), offer more stability but typically lower returns. Higher-risk investments, like stocks and mutual funds, provide greater return potential but come with increased volatility and the possibility of loss.
Keep in mind that investing involves risk, and your investment may be worth less when redeemed.
The Balancing Act
A balanced retirement portfolio often includes a mix of lower-risk and higher-risk investments. These options may include:
| Lower-Risk | Higher-Risk |
|---|---|
| Bank CDs | Stocks |
| Investment-grade bonds | Mutual funds |
| Money market accounts | Real estate |
| Fixed annuities |
Growth investments can help your portfolio increase over time. They may also provide extra income when markets perform well. The right mix depends on your goals, risk tolerance, and personal situation.
Timing Is Everything
Sequence of returns risk refers to the order in which your investments gain or lose value. This timing can affect how long your savings last. One way to manage this is by adjusting when you take withdrawals. For example, you might take out more money when your investments perform well.
During market downturns, you may want to reduce nonessential spending. This can help you avoid selling investments when prices are lower. Taking withdrawals when the market is stronger may help your money last longer.
A Word of Advice
As you enter retirement, consider speaking with a financial professional or reviewing your current strategy. They can help estimate how long your savings may last and how your portfolio might perform under different conditions. They can also help you adjust your spending based on market changes and select investments that align with your goals and risk tolerance.
Taking time to review your strategy now can help you feel more prepared. Then you can focus on what matters most, like spending time with family or planning your next trip!
All investing involves risk, including the possible loss of the money you invest.
Sources
- What Is the Average Retirement Age in the U.S.? https://www.fool.com/research/average-retirement-age/.
- US Inflation Rate (I:USIR). https://ycharts.com/indicators/us_inflation_rate.
