Investment Planning

A portfolio built for where you are today, and where you're headed.

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When a Market Drop Hurts Most

A market drop at 50 is frustrating. A market drop the year you retire can change your whole plan.

While you're working, a paycheck and time give you room to ride out a bad year. Once you're drawing income, you may be selling investments to cover living expenses while prices are down, and those losses are hard to make back.

That's why the way you invest at 50 shouldn't be the way you invest at 65.

Within 10 Years of Retirement

Your portfolio is still pursuing growth, but it's starting to prepare for its next job.

Pursuing growth: Keeping long-term money invested while you still have time

Gradual risk reduction: Stepping down risk, paced to your retirement date

Concentration: Reducing reliance on company stock or any single holding

Market plan: Deciding in advance how we'll respond to market swings

Retiring or Already Retired

Now each part of your portfolio has a specific job.

Income first: Structuring investments around the income you'll draw each year

Long-term growth: Keeping part of your portfolio invested to pursue growth that outpaces inflation

Down-market income: Knowing which sources fund your income when markets fall

Taking gains: Shifting money toward income when markets are up

Two Jobs, One Portfolio

In retirement, your portfolio has to pay you now and keep pursuing growth for later. The question is how to split the work.

My starting point is usually a bucket strategy: a few years of income set aside in more conservative investments, and the rest invested for the long haul. I don't refill on a set schedule. When markets are up, I shift gains toward income. When markets are down, you draw from the near-term bucket instead of selling at low prices.

It isn't the right fit for everyone. Some retirees are better served by an income floor, covering essential expenses with pensions like KPERS, Social Security, or annuities first. Others do best with systematic withdrawals from one diversified portfolio.

Whichever fits, you'll know what you own, why you own it, and what we'll do when markets get rough, before they do.

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Whether retirement is a few years out or already here, let's look at how your portfolio fits where you're headed.

Frequently Asked Questions

Retirement investment planning shapes how your portfolio is built as you approach and move through retirement. Before you retire, that means pursuing growth while gradually reducing risk. Once you're drawing income, it means structuring investments around that income, with a plan for how to respond when markets fall. At Priority Financial Planning in Hutchinson, Kansas, it's how I manage portfolios for people within 10 years of retirement or already retired.
As retirement approaches, most people gradually reduce investment risk and begin preparing their portfolio to provide income. That doesn't mean moving everything to cash. Retirement can last decades, so part of your portfolio still needs to pursue growth. The shift is usually spread over several years, paced to your retirement date, rather than made all at once. How far and how fast to shift depends on your income needs, your other income sources, and your comfort with market swings.
Sequence-of-returns risk is the risk that poor market returns early in retirement do lasting damage to your savings. When you're withdrawing income during a downturn, you may be selling investments at low prices, leaving less money invested when markets improve. Two retirees with the same average returns can end up in very different places depending on when the bad years happen. That's why the years just before and after retirement deserve extra attention in how your portfolio is built.
It depends on how your portfolio is set up. With a plan in place, you may be able to draw income from more conservative investments or from sources like Social Security or a pension, rather than selling growth investments while prices are down. Without one, you may face selling at low prices or delaying retirement. Deciding in advance how you'll handle a downturn is one of the most important parts of investing in the years leading up to retirement.
A KPERS pension can change how the rest of your savings should be invested. Because it pays a monthly benefit for life, it can cover part of your essential expenses, which may give your other investments more room to pursue growth. But KPERS 1 and 2 benefits don't include an automatic cost-of-living adjustment, so inflation can erode their buying power over time, and your investments may need to help fill that gap. Your partial lump-sum choice at retirement also affects how much you'll have to invest.
A bucket strategy divides your retirement savings based on when you'll need the money. Near-term income, often the next few years of withdrawals, is held in more conservative investments, while money you won't need for many years stays invested to pursue growth. When markets are down, you draw from the near-term bucket instead of selling growth investments at low prices. When markets are up, gains can be used to refill it. It can make market swings easier to live with, though it isn't the right fit for everyone.
An income floor is a base level of income that covers your essential expenses, like housing, food, and healthcare, using predictable sources such as Social Security, pensions, or annuities. Once those essentials are covered, the rest of your savings can be invested for other goals, like travel, gifts, or leaving an inheritance. The approach can bring peace of mind, but it involves trade-offs, such as the costs and reduced flexibility that can come with annuities.
There's no single right percentage. Rules of thumb, like subtracting your age from 100, are easy to remember but ignore what matters most: how much income you need from your portfolio, what Social Security and any pension will cover, how long your money may need to last, and how you handle market drops. Someone whose essential expenses are covered by a pension may be able to hold more in stocks than someone relying entirely on withdrawals. The right mix is built around your income plan.
Inflation reduces what your money can buy, and retirement can last 25 years or more. At 3% inflation, prices roughly double in about 24 years. That's why a retirement portfolio usually can't be entirely conservative. Keeping part of your savings invested to pursue growth that outpaces inflation is one way to help your income keep up with rising costs. Social Security includes annual cost-of-living adjustments, while many pensions do not, which is worth factoring into your plan.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.