Create Your Retirement Plan

A retirement portfolio is a collection of investments, including stocks, bonds, cash and other securities, designed to balance growth and income needs during retirement.

There are many ways to create a retirement portfolio. Many investors establish a plan via their employer, such as a 401(k), 403(b) plan or SIMPLE or SEP IRA. You could also open an IRA account which allow you to contribute to your retirement on your own, or taxable brokerage accounts which can provide additional flexibility.

Managing your retirement portfolio means reviewing your portfolio and investment strategy over time to ensure it’s still aligned with your long-term goals and cash flow needs. Monitor withdrawals carefully, since taking too much, especially during downturns, can deplete your assets. Revisit your goals and time horizon as circumstances change and adjust your asset allocation only when those long-term goals shift. Finally, stay disciplined to your strategy through short-term volatility, as reacting to market swings can negatively impact you reaching your long-term goals.

While cash can be useful for immediate needs, holding too much cash may hinder portfolio growth and income generation. The exact percentage of cash you hold depends on individual circumstances and goals. Maintaining an emergency fund outside your retirement portfolio that can cover around six months’ expenses is often a good rule of thumb.

Diversification in a stock portfolio can include an appropriate mix of sectors, regions/countries and individual stocks to reduce short-term volatility and concentration risk. For many investors, it’s important to maintain a growth-focused portfolio, typically utilizing stocks, to achieve their long-term retirement goals. Depending on an investor’s goals and time horizon, they may benefit from diversification involving spreading investments across different asset classes, like stocks, bonds and cash.