Retirement Roulette? Letting It All Ride on Stocks May Not Be Best
For those in or near retirement, gambling too hard on today’s record-setting bull market could be more risk than they bargained for.
Have you ever watched somebody playing roulette at a casino – or maybe just in a movie?
The chips pile up as the person gets lucky. And then he starts to get greedy.
You, of course, see the inevitable coming, and so you wonder: Why doesn’t he play it safe and set at least some of that aside? When the tide turns, and he loses everything, you shake your head.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
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.
But there’s a chance you’re doing the same thing with your investment portfolio.
With an eight-year bull market and a series of record-setting highs, it’s hard not to be – let’s not say greedy, but definitely enthusiastic.
If you (understandably) moved from more conservative financial vehicles to stocks to grow your wealth – or just to keep up with inflation – it may be time to take some chips off the table as you close in on retirement.
Yes, it’s fun watching your account balances grow month to month and year to year. But at some point, the market will have to correct, and there could be a serious downturn. If you’re in retirement – or close to it – when that happens, you may not be able to recover.
The stock market appears to love our new president, but that doesn’t mean record growth is guaranteed to continue. Not to mention that we’re in a global economy and our future is intertwined with dozens of other countries. Moves to protect our borders, slow immigration, disrupt trade agreements and perhaps impose tariffs are bound to have some effect on the marketplace. And then there’s terrorism, threats from emerging nations and anxiety among some of our longtime allies.
Change – good or bad – can be unpleasant.
Start by developing a plan
So, how can you help protect yourself from the pain and still make the most of the current market?
Do some math. Figure out how much income you’ll need to get by every year in retirement. (And plan for a lot of years. It could 20 or 30, or longer.) Then add up the income streams you know you can count on: a pension, if you have one, Social Security and other stable sources that aren’t dependent on the vagaries of the general marketplace. If there’s a gap between those numbers – and if you’re a Baby Boomer, there probably is – you’ll have to find a way to fill it.
Should you need to pull a chunk from your retirement accounts every month, make sure that money is positioned in a way that can help make sure it won’t take a massive hit if there is a market correction.
There are myriad vehicles out there that can help lower your risk, including:
- Dividend-paying stocks
- Annuities
- Municipal bonds
If you don’t have a pension, you can create your own guaranteed income stream to help complement your Social Security income, so you hopefully don’t have to spend your days worrying and watching CNBC.
Have a frank talk … together
Talk to your financial professional about which solutions might be a good fit for you. But before you go, heed this bit of advice: Both spouses need to take part in the conversation.
That guy at the roulette table who loses all his money? He seldom has his wife at his side. She’d probably stop him – or grab a couple of stacks and run back to their hotel room. After all, it’s her money, too.
At our firm, we’ve found that many women are prudent when it comes to finances and value smart planning. They know the odds, and if their spouse dies, they want to remain financially independent.
Once the two of you have developed your retirement income plan, if there’s something left over, you can head back to the market. And let the chips fall where they may.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Your Own Retirement are not affiliated companies. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, or guaranteed income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
-
Timeless Trips for Solo TravelersHow to find a getaway that suits your style.
-
A Top Vanguard ETF Pick Outperforms on International StrengthA weakening dollar and lower interest rates lifted international stocks, which was good news for one of our favorite exchange-traded funds.
-
Is There Such a Thing As a Safe Stock? 17 Safe-Enough IdeasNo stock is completely safe, but we can make educated guesses about which ones are likely to provide smooth sailing.
-
Missed Your RMD? 4 Ways to Avoid Doing That Again (and Skip the IRS Penalties), From a Financial PlannerIf you miss your RMDs, you could face a hefty fine. Here are four ways to stay on top of your payments — and on the right side of the IRS.
-
What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)The administrative requirements following a death move quickly. This is how to ensure your loved ones won't be plunged into chaos during a time of distress.
-
AI-Powered Investing in 2026: How Algorithms Will Shape Your PortfolioAI is becoming a standard investing tool, as it helps cut through the noise, personalize portfolios and manage risk. That said, human oversight remains essential. Here's how it all works.
-
A Newly Retired Couple With a Portfolio Full of Winners Faced a $50,000 Tax Bill: This Is the Strategy That Helped Save ThemLarge unrealized capital gains can create a serious tax headache for retirees with a successful portfolio. A tax-aware long-short strategy can help.
-
5 Retirement Myths to Leave Behind (and How to Start Planning for the Reality)Separating facts from fiction is an important first step toward building a retirement plan that's grounded in reality and not based on incorrect assumptions.
-
I'm a Financial Adviser: Silence Is Golden, But It Hurts Your Heirs More Than You ThinkTalking to heirs about transferring wealth can be overwhelming, but avoiding it now can lead to conflict later. Here's how to start sharing your plans.
-
Will Your Children's Inheritance Set Them Free or Tie Them Up?An inheritance can mean extraordinary freedom for your loved ones, but could also cause more harm than good. How can you ensure your family gets it right?
-
I'm a Financial Adviser: This Is the Real Key to Enjoying Retirement With ConfidenceA resilient retirement plan is a flexible framework that addresses income, health care, taxes and investments. And that means you should review it regularly.
