Building a Retirement Portfolio: What Every Investor Should Know

In the years leading up to retirement, your investment strategy may have been focused on accumulation, maximizing growth, taking calculated risks, and riding out market volatility. But as you enter or approach retirement, the strategy must evolve. Now, it’s not just about growing your assets; it’s about preserving what you’ve built, generating income, and ensuring your portfolio supports a lifestyle that could last 25 to 30 years or more.

Whether you’re five years away from retirement or already there, building a durable and strategic retirement portfolio is essential. Here’s what every investor should know.

1. Start With a Clear Retirement Plan

Before you can build the right portfolio, you need a solid understanding of your retirement goals. How much income will you need annually? What are your fixed and discretionary expenses? Will you downsize or relocate? Travel frequently? Help adult children or grandchildren?

Your portfolio isn’t built in a vacuum and should reflect your specific timeline, lifestyle goals, and anticipated spending. A good plan will also account for inflation, healthcare costs, taxes, and long-term care needs.

2. Balance Growth With Preservation

Many investors mistakenly believe they need to shift entirely to conservative investments at retirement. While reducing risk is important, being too conservative can be just as dangerous, especially with rising life expectancies and inflation eating into purchasing power.

Your portfolio should still include a mix of growth-oriented investments—typically equities—balanced with more stable assets like bonds, cash equivalents, and possibly alternative income sources. This diversification helps manage volatility while allowing your assets to continue compounding over time.

3. Create Reliable Income Streams

In retirement, income becomes the name of the game. Social Security and pensions may cover a portion of your needs, but most retirees will also rely on withdrawals from investment accounts.

A sound portfolio should include a plan for tax-efficient withdrawals and layered income from various sources: dividends, bond interest, annuities, or systematic withdrawals. Structuring your accounts to draw from taxable, tax-deferred, and tax-free sources at the right times can help minimize taxes and extend the life of your portfolio.

4. Mind the Sequence of Returns Risk

Sequence of returns risk is one of the most overlooked dangers in retirement. It refers to the risk of experiencing poor market returns early in retirement when you’re actively drawing from your portfolio. These early losses can compound over time and significantly reduce how long your money lasts.

To mitigate this, many retirees create a "bucket strategy” segregating assets into short-term, intermediate, and long-term buckets. Short-term needs are covered with cash or cash equivalents, while longer-term assets remain invested for growth. This structure allows you to avoid selling investments in a downturn.

5. Stay Flexible and Reevaluate Regularly

Retirement isn’t static. Market conditions change, tax laws shift, and your personal needs may evolve. Your portfolio and withdrawal strategy should adapt over time. Annual reviews can help ensure your investment mix, income strategy, and risk tolerance remain aligned with your goals.

It’s also smart to have contingency plans—whether for a market correction, a major health expense, or changes in family dynamics.

6. Tax Efficiency Is Crucial

Taxes don’t end in retirement—they often become more complex. Strategic portfolio construction can reduce unnecessary tax drag. This includes:

• Asset location (placing investments in accounts based on their tax efficiency)

• Roth conversions

• Managing required minimum distributions (RMDs)

• Capital gains planning

Working with a financial advisor or tax professional can help you optimize your portfolio’s structure and withdrawal schedule.

7. Don’t Go It Alone

There’s a lot at stake in retirement, and a misstep can be costly. While DIY investing might have worked during your accumulation years, retirement often requires a more nuanced and disciplined approach.

A qualified financial advisor can help ensure your portfolio is appropriately diversified, risk-managed, and built with your unique retirement needs in mind. More importantly, they can help you stay on track emotionally and financially during periods of market volatility or personal change.

In Summary

A well-constructed retirement portfolio is about more than just selecting the right investments. It’s a dynamic strategy that considers your goals, timelines, income needs, and risk tolerance—while adapting over time to keep you protected and on course.

After all, retirement isn’t the end of your financial journey, it’s the beginning of a new phase where smart planning continues to pay dividends.