How Should You Invest Your Money After You Retire?
Retirement changes the job of your portfolio
One of the biggest transitions in retirement isn’t just about stopping work — it’s about changing the way you think about money.
Up until now, your goal has been to save for retirement. But once you retire, the challenge flips: now your money needs to last through retirement, and none of us knows exactly how long that will be.
I have one client who always reminds me - “Brandon, when the market drops, I’m not putting money into my 401(k) anymore — I’m taking it out.” That shift changes everything.
Start with spending and reliable income
The funny thing is that particular client has about a 1% withdrawal rate, which is a lot lower than it could be, and his money will last forever at that rate. That said, it’s still a good reminder for me to think like a client during retirement. I’m sure he’ll get a chuckle reading this.
Related planning guidance: Investing & Portfolio Strategy
To plan for that change in direction and mindset, we create a clear retirement income strategy that maps out where your income will come from, year by year. The goal is to build a solid foundation of predictable income — things like Social Security and pensions — and then fill the gap from your portfolio.
We call that the income gap.
Set aside near-term withdrawals
Think of it this way: if you need $8,000 per month to live comfortably, and you’re receiving $5,000 from two Social Security checks plus another $1,000 from a pension, that totals $6,000 in guaranteed income.
The remaining $2,000 — your income gap — has to come from your investment portfolio. That’s the portion your assets need to reliably produce every month to maintain your lifestyle.
Many advisors rely on generic “risk tolerance” surveys or the traditional three-bucket approach. The problem is, those answers shift with market emotions.
Match risk to the time horizon
I prefer a more data-driven, structured approach. Since 1940, the stock market has always recovered within five years.* That’s why I keep five years of income set aside safely — protected from market swings.
Related planning guidance: Investing & Portfolio Strategy
The rest of the portfolio can stay invested for growth — to help offset inflation, cover healthcare costs, or support your lifestyle decades down the road.
The key is rebalancing. When the market does well, we refill the income bucket, keeping about five years’ worth ready and stable. That discipline helps buy low and sell high — automatically.
Diversify and rebalance deliberately
A good retirement income plan isn’t just about numbers.
It’s about confidence — knowing your plan can weather anything the market throws at you.
* SOURCE: According to findings by Louis S. Harvey, the founder of Dalbar, U.S. equities have fully recovered within five years after crashes since 1940. Pechter, K (Jan 20, 2022). A 5-Year Cushion against Market Risk. Retirement Income Journal, January 2025 Issue.
