Planning Your Transition Toward Retirement
As you close in on the big day, it's time to consider how you'll create income while dialing down stock market risk.
 
 
As retirement approaches, you need to keep several things in mind when planning for the road ahead — income planning, health care costs and tax strategies to name a few — but one of your main objectives has to be how to avoid being at the mercy of the stock market.
Individuals who plan their retirement in advance are far more likely to be prepared for when the market goes up and when it takes a hit than those who put it off. With the right game plan in place, you may be able to enjoy retirement even if the market has major corrections, like what we saw in 2008. Ten years prior to full retirement age — for most us, that’s the mid-50s — you should start seriously crafting a plan. At that age, you typically want to begin making transition from your main priorities of growth and accumulation to income and wealth preservation. What you do at that time can have a huge impact on your future.
Some of us make this transition better than others. Most of us rely on the stock market during our accumulation years, but, with retirement looming, we should not have all our eggs in that one basket. There are several ways to diversify, including:
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.
- Real estate.
- Tax-efficient bonds.
- Insurance products such as fixed index annuities, and perhaps even those with guaranteed income riders. Many financial professionals likely recommend individuals consider annuities when they start planning for retirement because they can provide protection of your principal along with other guarantees that are backed by the financial strength of the insurance carrier that issues the contract.
In our younger and accumulation years, we are ready to ride the market out through its various shifts and corrections, holding onto the money in our portfolios as the market goes up and down. But, as we approach retirement and after we retire, you may be taking money out of your accounts on regular basis for income. If so, the sequence of returns becomes a major consideration; if you are pulling money out of the market on a regular basis to support your lifestyle, the market may come back, but your money might not. It is a far different experience from what we have grown accustomed to during the accumulation years. Your retirement lifestyle should not vary as the market moves up and down.
There are other changes as well. Your risk tolerance might drop the closer you get to retirement, and one way to protect yourself is by truly diversifying your holdings. One good general rule to consider would be to have:
- One-third of your holdings in real estate.
- One-third in more secure income products like bonds and annuities that protect your principal from market losses.
- One-third in the stock market for growth and a hedge on inflation.
If you do not own any real estate, consider the rule of 100. One hundred minus your age is the most equity exposure you should have.
One way to help ensure you have enough diversity in your portfolio is by choosing to work with an independent financial adviser, one held to a fiduciary standard who must, by law, put your best interests first and who, as an independent adviser, has access to a wide array of financial products that can help you pursue your goals. Consider a truly diversified portfolio with investments that are not correlated. Talking to a range of financial professionals can help ensure your holdings are properly diversified and not all in the same lane, putting your wealth in serious jeopardy.
Of course, there are other things to consider as you plan ahead for retirement. You need to factor in all of your assets, pension, Social Security, rental income, dividends and your expenses as you prepare for a comfortable retirement. When I visit people for the first time, I find that most portfolios only focus on investments. A holistic financial plan should include income planning, investment strategy, tax-efficiency, health care planning and legacy planning.
Kevin Derby contributed to this article.
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.

Michael Ladin is founder and CEO of Ladin Tax & Financial Group, a firm that focuses on assisting Florida business owners, Baby Boomers and retirees with retirement income strategies that work in a tax-efficient way.
- 
 Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap. 
- 
 Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t) Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history. 
- 
 Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs) Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation. 
- 
 This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had Holes This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts. 
- 
 A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested. 
- 
 I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth Transfer I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally. 
- 
 To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's Steps To Reap the Full Benefits of Tax-Loss Harvesting, Consider This Investment Strategist's StepsTax-loss harvesting can offer more advantages for investors than tax relief. Over the long term, it can potentially help you maintain a robust portfolio and build wealth. 
- 
 Social Security Wisdom From a Financial Adviser Receiving Benefits Himself Social Security Wisdom From a Financial Adviser Receiving Benefits HimselfYou don't know what you don't know, and with Social Security, that can be a costly problem for retirees — one that can last a lifetime. 
- 
 Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest Egg Take It From a Tax Expert: The True Measure of Your Retirement Readiness Isn't the Size of Your Nest EggA sizable nest egg is a good start, but your plan should include two to five years of basic expenses in conservative, liquid accounts as a buffer against market volatility, inflation and taxes. 
- 
 New Opportunity Zone Rules Triple Tax Benefits for Rural Investments: Here's Your 2027 Strategy New Opportunity Zone Rules Triple Tax Benefits for Rural Investments: Here's Your 2027 StrategyNew IRS guidance just reshaped the opportunity zone landscape for 2027. Here's what high-net-worth investors need to know about the enhanced rural benefits.