2 Moves Retirees Can Make Now to Protect Their Portfolios and Income

2 Moves Retirees Can Make Now to Protect Their Portfolios and Income

By Steven Orlowski, CFP, CNPR

Retirement is supposed to be the reward for a lifetime of work—a time to relax, travel, and enjoy the fruits of one’s labor. But for many retirees, economic uncertainty, market volatility, and rising living costs can quickly turn that dream into anxiety. The good news? A few smart moves can go a long way in safeguarding both your investment portfolio and the income it generates.

Here are two essential strategies retirees can implement right now to help fortify their financial future.

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1. Shift from Growth to Income—But Don’t Abandon Growth Entirely

As retirees move from the accumulation phase to the distribution phase, the focus naturally shifts from growing assets to generating reliable income. But the biggest mistake many make is becoming too conservative too quickly—dumping stocks for bonds, or even worse, cash. While preserving capital is important, inflation can quietly erode purchasing power over time, especially in a retirement that could last 20 to 30 years.

A balanced approach is key.

• Allocate a portion of your portfolio to dividend-paying stocks or high-quality equity income funds. These investments can offer both potential for growth and regular income through dividends.

• Consider a bond ladder or a diversified mix of short- and intermediate-term fixed-income investments to reduce interest rate risk while maintaining steady cash flow.

• Use total return investing as a strategy—where income is derived from both interest/dividends and strategic asset sales—to provide more flexibility in managing taxes and withdrawals.

This hybrid approach allows retirees to maintain a level of growth potential while still drawing a predictable income.

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2. Create a “Retirement Paycheck” Using a Bucket Strategy

One of the biggest sources of stress in retirement is figuring out how to replace a paycheck. The solution? Create one yourself.

The bucket strategy is a time-tested method that segments your assets into different "buckets" based on when you’ll need the money.

• Bucket 1 (Years 1–3): Cash and short-term savings to cover near-term living expenses. This is your “safe” money.

• Bucket 2 (Years 4–10): Bonds and conservative investments to replenish Bucket 1 as needed.

• Bucket 3 (Years 10+): Stocks and growth-oriented assets that can ride out market fluctuations and replenish Buckets 1 and 2 over time.

This system provides peace of mind. Even in a downturn, you’re not forced to sell stocks at a loss to fund your living expenses because the money you need in the short term is safely tucked away.

It also gives you a psychological edge. Knowing that your immediate needs are covered can prevent emotional decision-making during market downturns—a common pitfall for retirees.

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Final Thoughts

Retirement is no time to “set it and forget it.” By proactively shifting your strategy from growth to income and implementing a structured withdrawal plan like the bucket strategy, you can gain more control over your finances, reduce anxiety, and enjoy retirement the way it was meant to be.

Even small adjustments can have a big impact over time. Speak with a qualified financial advisor to tailor these strategies to your unique needs and goals—and make sure your retirement income is built to last.