How to Invest After Being Retired

by Lisa Bigelow

When you retire, you're ready to reap the rewards of the investments that you've worked so diligently to grow over the decades. But just because you quit your day job, doesn't mean you're going to stop investing. And because today's retirees are living longer than those of previous generations, maintaining an investment strategy is essential to helping provide a comfortable retirement.

1. Anticipate your life expectancy. When doing so, it's better to over estimate than to under estimate, as you don't want to outlive your funds. Assuming that you retire at age 65, planning for an additional 20 to 30 years is reasonable.

2. Develop a budget that meets your lifestyle's needs. It's critical to decide how much you're able to spend once you're on a fixed income, including pension payments, 401(k) withdrawals and Social Security. Many retirees plan to travel or pursue hobbies; be sure to include extra funds for those activities. Also, you may need extra funds for medical expenses several years down the road.

3. Decide your investment mix to match your anticipated lifestyle. You don't want to run out of money too soon, or spend so little that you can't enjoy your retirement. Retirees' investments should grow faster than what they are withdrawing for the first six to eight years of retirement, then match those withdrawals for the next 10. After this period, you may elect to increase principal withdrawals while focusing less on capital appreciation.

4. Change your investment mix for the first six to eight years. While conventional wisdom suggests that retirees should only invest in guaranteed bonds, that strategy reduces the likelihood that the capital's appreciation will outstrip your withdrawals. As a result, having a small percentage of your investments in equities can be a good strategy. Because equities are riskier than bonds, you must decide how much risk you can live with. Many professional advisers suggest a mix of 80 percent bonds to 20 percent equities.

5. Change your investment mix for the following 10 years. You may want to reduce your equities exposure further at this point because at this point in your retirement, you'll likely want to reduce the risk of your investments. For example, you may want to hold less than 20 percent of your portfolio in stocks, with the rest in guaranteed bonds. Keep in mind that you'll want to make sure your investments are outpacing inflation.

6. Consider speaking to a financial adviser. Many factors determine how you should plan your retirement savings. Whether or not you own your own home, where you live, what your plans are post-retirement and your health needs are just a few. You may also decide that you want to leave a legacy for a charity or for your children. As a result, your personal plans and the amount of risk you're willing to take will play a large role in your decisions.


  • A financial adviser can help you organize a long-term investment strategy during your retirement.

Items you will need

  • List of income sources, such as investments, pensions and Social Security payments
  • Expenses, including a budget for leisure activities and possible increased medical costs

About the Author

Lisa Bigelow is an independent writer with prior professional experience in the finance and fitness industries. She also writes a well-regarded political commentary column published in Fairfield, New Haven and Westchester counties in the New York City metro area.

Photo Credits

  • Jupiterimages/BananaStock/Getty Images