Invest More Conservatively After Retirement

Prior to retirement, you’ll probably want to take a little more risk in your investments to maximize your return, but you may want to invest more conservatively after retirement.

Invest more conservatively after retirement to protect your assets and financial security.

Invest more conservatively after retirement

Since you want to have as much money as possible saved when you retire, higher risk investments — with the associated higher returns — make good sense. Even if the market goes south, you’ll still have several years of employment to carry you through until the market rebounds. You might also consider working a few extra years to save even more.

The single biggest difference is that you have a lot more flexibility during your career when it comes to retirement planning. For example, if you have the bulk of your retirement accounts in stocks and the market tanks, you’ve got plenty of options for rebuilding the value of those accounts.

With years of work still ahead of you, you can simply sit back and wait for the market to rebound and eventually climb to higher ground. Or you can pump up the amount you contribute to your retirement accounts, which will hasten the recovery of your balances.

After you’ve retired, it’s a vastly different scenario.

Unlike during your career when you’re still putting money into your 401(k), IRA or other accounts, you’ll be pulling money out of your nest egg once you retire. And that creates a very different dynamic.

Specifically, the combination of investment losses from a market downturn, plus withdrawals from your account for retirement living expenses creates a double-whammy effect that can decimate the value of your portfolio and dramatically increase your chances of outliving your dough.

As a result, the same market meltdown that may be very unsettling during your career can be absolutely devastating after you’ve retired, perhaps even forcing you to radically scale back your standard of living to avoid running through your money too soon.

There is no single “right” answer to how you should invest — before or after retirement. But, because of your reduced earning power it’s wise to invest more conservatively after retirement.

Click here to read more about why you should invest more conservatively after retirement.

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