“I am getting close to retirement. Shouldn’t my portfolio be more conservative or even in cash?”
Not necessarily. When you retire, you typically need your money to work for you over the next 20 to 30 years. Most people cannot afford to stop investing. Imagine saying, “I’m going to retire, stop earning money, and let my money retire too… neither of us needs to be earning.” This mindset can be detrimental to your long-term financial health.
Investing during retirement is crucial because it helps you keep pace with inflation and maintain your purchasing power. If you shift all your assets to cash or overly conservative investments, you risk not only depleting your savings faster but also losing ground to inflation. The cost of living continues to rise, so your money needs to grow to keep up.
Time and again I meet clients who, despite withdrawing money for decades, still have as much or more than they initially invested. This common scenario often looks something like this: you invest $1,000,000, withdraw $750,000 over time, and have $1,200,000 remaining. This is possible because their investments continue to generate returns that outpace their withdrawals.
If you had left your money in savings instead of investing, you might only have $250,000 left. Savings accounts generally offer low interest rates that barely keep up with inflation. When I show clients their personal numbers, it really emphasizes the importance of making your money work for you, especially during retirement.
Additionally, a well-diversified portfolio can provide a balance between growth and safety, ensuring your money continues to grow and support your lifestyle for many years to come. Remember, retirement is not the end of your financial journey—it’s a new phase where smart investing is crucial.
Authored by Portia White, CEO
Preliminary language, parameters, and edits for this blog were crafted by the Whelan Financial team and Portia White, CEO, with the help of generative AI.
