Building a Resilient Portfolio for Retirement

Retirement requires a fundamentally different portfolio approach. While accumulation portfolios prioritize growth, retirement portfolios must balance growth with income generation and capital preservation. This fundamental shift shapes every investment decision.

The Withdrawal Challenge

Retirees face a unique challenge: they must generate income from their portfolio while maintaining purchasing power against inflation. This requires a portfolio structure that generates adequate income without excessive concentration in low-yielding assets.

The Bucket Strategy

Many successful retirees employ a bucket strategy: near-term needs (1-3 years) are held in cash and bonds, intermediate needs (3-10 years) in diversified equities and alternatives, and long-term assets (10+ years) in growth-oriented investments. This structure provides both income and growth.

Sequence of Returns Risk

The order in which returns occur matters significantly in retirement. A portfolio that experiences poor returns early in retirement faces greater risk of depletion than one experiencing identical average returns in a different sequence. Careful portfolio construction mitigates this risk.