Entering your 50s and 60s often means shifting your financial strategy from wealth building to wealth preservation. While you still need growth to keep up with inflation, you also need stability to safeguard your retirement income. Selecting the right combination of investments can help you strike a balance between your financial and personal objectives.
Prioritize a Balanced Portfolio
One of the most effective strategies at this stage of life is diversification. A balanced portfolio distributes your money across stocks, bonds, and cash equivalents, thereby reducing the impact of market fluctuations. You want enough exposure to stocks for growth, but not so much that a downturn threatens your retirement security.
Many advisors recommend gradually reducing stock allocation while increasing holdings in bonds and other safer assets. This doesn’t mean avoiding growth altogether. It’s about finding the right mix that supports both stability and long-term sustainability.
For a deeper dive, see Retirement Savings Benchmarks: How Do You Compare?
Consider Dividend-Paying Stocks
Dividend-paying stocks can be particularly attractive for individuals in their 50s and 60s, as they offer both potential growth and income. Companies with a strong history of paying dividends often remain stable even in uncertain markets, offering regular cash flow in addition to the potential for capital appreciation.
Reinvesting dividends before retirement can accelerate account growth. Later, those dividends can become part of your retirement income stream. This makes dividend stocks a versatile option that supports both saving and spending phases.
Look Into Bonds and Fixed Income Options
Bonds are a cornerstone for many retirement portfolios, offering predictable income and reduced risk compared to stocks. U.S. Treasury bonds, municipal bonds, and high-quality corporate bonds provide varying levels of safety and yield. Adding these helps balance your portfolio against market volatility.
Other fixed income products, such as certificates of deposit (CDs) or bond funds, can also provide steady returns with relatively low risk. While they won’t deliver the same growth as equities, they create stability and reliable income.
Don’t Overlook Real Estate
Real estate investments, whether direct ownership or through real estate investment trusts (REITs), can provide diversification and income. Rental properties can generate consistent cash flow, while REITs allow you to invest in real estate without the responsibilities of being a landlord.
Real estate also tends to rise in value over the long term, making it a valuable hedge against inflation. Ensure that any real estate investment aligns with your risk tolerance and retirement timeline.
Explore Annuities for Guaranteed Income
For some, annuities can provide peace of mind by guaranteeing a lifetime income. Fixed annuities offer steady payments, while variable and indexed annuities provide more growth potential, though with added complexity. Annuities aren’t right for everyone, but they can help cover essential expenses when paired with Social Security and pensions.
If you’re considering this route, compare fees, terms, and payout structures carefully. Annuities are best viewed as part of a comprehensive plan, rather than a stand-alone solution.
If you’re looking at other strategies, read The Role of Annuities in a Retirement Portfolio.
The Bottom Line
Investing in your 50s and 60s means striking a careful balance between growth and protection. A mix of dividend-paying stocks, bonds, real estate, and possibly annuities can provide both security and opportunity. By choosing investments wisely, you can create a portfolio that supports your retirement years with stability, income, and peace of mind.
