Successfully Saving for Retirement is Only Half the Journey
The strategies you used to get to retirement probably won’t work once you’re there. You’re going to need to chart a new course.


Income planning changes greatly as you near retirement. The strategies and tactics you have used for years, or even decades, to build your portfolio need to be adjusted as you reach this point. Retirement-minded individuals can’t follow the same roadmap they used in their accumulation years.
When it comes to money, almost every retirement-minded individual is looking for safety, yield and liquidity with their financial vehicles. But it’s difficult, if not impossible, to find all three of those characteristics without some major diversification. Still, there are ways for you to find a good combination of all three to rely on when you are at or near retirement, but you need to break down your portfolio into two distinct categories.
1. The Principal-Protection World
There are some financial vehicle options that are pretty secure. These include bank CDs, government bonds, fixed annuities and other similar products. The principal, interest and terms are guaranteed, but there are some downsides, including penalties for early withdrawals and fees. Another drawback to these financial vehicles is their low interest rates.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Options do exist that offer principal protection while letting people take advantage of gains in the market. These products include:
- Treasury Inflation-Protected Securities (TIPS)
- Equity-linked CDs (ELCDs) at banks
- Fixed index annuities
These products offer principal protection with interest determined based on an external market index. But, just like CDs or government bonds, there are penalties for early withdrawals, and your money is not directly invested into the market. However, there’s generally more potential to earn interest than some of the more liquid financial products.
2. The Risk World
Finally, there is the sphere that does have risk but also offers the upside of potential growth. In this world, you will find these choices, among others:
- Stocks
- Mutual funds
- Options
- Real Estate Investment Trusts (REITs)
- Variable annuities
Of course, in the Risk World, the principal is not guaranteed. Neither are interest or earnings. But the term is usually open-ended and, over time, these investments often prove effective. That time factor is one of the downsides for those at or near retirement, because most of us simply aren’t sure how much time we have to really make gains with our investments.
As we near retirement, we have to be careful how we distribute our money between different financial products. Of course, we all love the products that have market risk when the market is going up but, when it’s plunging, it’s a very different story. Very few people at or near retirement can afford to face a major loss like what happened to too many of us back in 2008. The question for many, especially those of us drawing close to retirement, is how to avoid those kinds of losses.
Drawing up a plan that balances the worlds of principal protection and risk is a complicated process. A good financial professional, especially one who focuses on planning for retirement, can help you plan for market volatility. They’ll be able to help you manage risk or even find out how much risk you are comfortable with. A knowledgeable retirement professional can help map out how much of your assets you want subject to market risk and how much you want secured with principal protection.
Before you build your retirement income plan, you have to know how much of your wealth you want in each of the worlds mentioned above. There’s no one model that works for every individual, of course. Some of us want more guaranteed income. Others prefer to rely on the stock market and other financial vehicles, which include elements of risk.
Regardless, all retirement-minded individuals want to move from paychecks to “playchecks.” A good retirement professional can help you do just that, helping you navigate these two worlds of financial vehicles.
Don Ross, founder and president at Ross Wealth Advisors, has more than 25 years’ experience in the insurance and financial services industry. Don lives in Upper Arlington, Ohio. He and his wife, Joni, have three children: Judith, Ryan and Lance.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Don Ross, founder and president at Ross Wealth Advisors, has more than 25 years' experience in the insurance and financial services industry. He has passed the Series 7 securities exam and holds a life insurance license in Ohio. Retired from the military after more than 20 years of service as a pilot in the Ohio National Guard, Ross lives in Upper Arlington, Ohio, and enjoys traveling, yard work and cycling. He and his wife, Joni, have three children: Judith, Ryan and Lance.
-
Planning a Major Home Renovation? 3 Smart Ways to Finance It
From HELOCs to personal loans, here’s how to pay for a major home renovation without draining your savings.
-
Six Warren Buffett Quotes Every Retiree Should Live By
The 'Oracle of Omaha' knows a thing or two about life, investing and retirement.
-
Budget Hacks Won't Cut It: These Five Strategies From a Financial Planner Can Help Build Significant Wealth
Cutting out your daily latte might make you feel virtuous, but tracking pennies won't pay off. Here are some strategies that can actually build wealth.
-
To Unwrap a Budget-Friendly Holiday, Consider These Smart Moves From a Financial Professional
You can avoid a 'holiday hangover' of debt by setting a realistic budget, making a detailed list, considering alternative gifts, starting to save now and more.
-
Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record
Homeowners who are considering using home equity in their retirement plan can analyze it like they do their other investments. Here's how.
-
Why Does It Take Insurers So Darn Long to Pay Claims? An Insurance Expert Explains
The process of verification, investigation and cost assessment after a loss is complex and goes beyond simply cutting a check.
-
Two Reasons to Consider Deferred Compensation in the Wake of the OBBB, From a Financial Planner
Deferred compensation plans let you potentially lower your current taxes and help to keep you out of a higher tax bracket. It's important to consider the risks.
-
Financial Fact vs Fiction: The Truth About Social Security Entitlement (and Reverse Mortgages' Bad Rap)
Despite the 'entitlement' moniker, Social Security and Medicare are both benefits that workers earn. And reverse mortgages can be a strategic tool for certain people. Plus, we're setting the record straight on three other myths.
-
The End of 2%? An Investment Adviser's Case for Why the Fed Should Raise Its Inflation Target
Yes, inflation can be tough on those living on fixed incomes, but protecting us from it too strictly could do our overall economy more harm than good.
-
Medicare Open Enrollment: Why You Need to Pay Extra Attention to Part D, From a Financial Adviser
The lowest premium for prescription drug coverage might not actually save you the most money. Make sure you take copays into consideration and do the math.