How to Transition to Retirement - 7 Strategies for Managing Investments

About the Author

greg wells

Greg Wells, CFP®

Regional Director/Partner
Torrance, California

Author: Greg Wells

You’ve been investing for decades, looking ahead toward the steadily approaching goal of a secure transition to retirement. But unlike a race that’s a sprint to the finish, this is a journey requiring significant strategic thinking and decision-making well before you make the transition from accumulating assets to spending them to support your desired lifestyle. What kinds of assets should you favor, and how should you balance them? How should you treat retirement plans? Which best practices should you follow and what mistakes should you avoid? While we believe in evaluating every client’s needs individually, some general guidelines are relevant regardless of your situation.


  1.  When shifting away from growth-oriented assets to income-generating ones that replace the loss of your earned income, don’t assume every option is a “conservative” one that will reduce risk. Your transition-to-retirement strategy should involve looking deeply into why something is generating a lot of income. Many times we find these investments involve large uses of leverage or other tactics that can magnify income, but just as easily magnify losses if the bet is incorrect.


  1. Target-date funds that automatically adjust their stock, bond and cash components as retirement nears are best used by younger investors who are just getting started, or as a short-term placeholder for investors closer to retirement age. When you’re near or entering retirement, we believe a solution specifically customized for your personal or family situation may be a better way to transition your assets to address your goals and tax strategies.


  1. Keep your asset allocation on course during your 50s and early 60s by rebalancing your portfolio once a quarter ideally, or at least once a year. Part of retirement transition planning should involve a constant review of your target asset allocation, which may be changing as you get older. This review will help ensure your allocation matches your financial plan.


  1. Take advantage of the difference that separates 401(k) and similar qualified plans from taxable accounts by considering which assets best suit each account. For younger investors with longer time horizons, the optimum risk level of assets in qualified plans typically can be higher. For older investors, higher-yielding or higher-growth assets can be held in qualified plans to keep overall taxable income lower. Individual stocks that pay qualified dividends at lower tax rates can be held in after-tax or non-qualified accounts. These are also the place to hold municipal bonds for those whose tax situation makes them advantageous.


  1. Whether to transition some assets to cash during your 50s is a highly individual decision that totally depends on your financial plan. An immediate requirement to complete a need for income, buying a vacation home or traveling extensively may argue for more cash. Otherwise, the transition to retirement age typically establishes fixed income and expense levels that require less cash than when you are working and must maintain a larger cash cushion to handle the possibility of losing your job.


  1. Other best practices to keep in mind as you approach retirement include making use of strategic tax planning, as well as trimming investment fees—a worthwhile goal no matter what your age. The years just before retirement often are high-earning ones with relatively lower expenses, and with kids out of college and out of the house, you may have more flexibility in what you do with your money. Your financial advisor can help you decide, depending on your needs and tax situation, whether it makes sense to take advantage of deferred compensation, max out retirement plan contributions and/or Roth IRAs, or opt for Roth conversions.


  1. As for mistakes to avoid when you’re preparing your portfolio for retirement—the biggest one of all is not creating a plan! If you don’t work with someone to develop a roadmap to retirement, you can’t know whether you’re on track or when you’re ready to retire. Another mistake can be an emphasis on annuities and other non-liquid investments that deny you the flexibility of keeping your options open; this matters even more for those without a financial plan. It’s also wise to beware of investing too conservatively. Many people live more years in retirement than they lived working at their jobs. When your money may need to last 40 years or more, being too conservative can cause you to lose out to inflation over time. One other way to lose out is to leave money on the table by walking away from a job that might offer continued employment by working in a smaller capacity or as a contractor. A partial income with greatly reduced work hours and less responsibility can be financially, as well as, personally rewarding.


What detailed steps can help make your own retirement transition as smooth and successful as possible? Visit the retirement planning page for more information or contact an EP Wealth Advisor to discuss creating a plan tailored to your specific financial situation and future goals.



Content offered is strictly for informational purposes only and should not be regarded as a complete analysis of the subjects discussed. Information presented does not involve the rendering of personalized investment or tax advice, and is limited to the dissemination of general information that is intended to be educational in nature. This presentation is not intended to supersede or substitute professional tax or investment advice. Please consult an investment and/or tax professional before implementing anything referenced directly or indirectly herein.

EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EPWA has used its best efforts to verify the data included in this report. The information presented was obtained from sources deemed to be reliable. However, EPWA cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are subject to change without notice.

Planning for retirement is a process that is a unique endeavor that is particular to each person’s specific situation. Goals differ from person to person and there can be different mechanisms of reaching and accomplishing your unique retirement goals. There is no guarantee that the referenced information will suitable, applicable, or produce positive results. All investment and/or planning strategies are subject to profit and loss

EP Wealth Advisors is not in the business of providing legal or tax advice or preparing legal or tax documents. Please consult with a CPA, tax professional, and/or attorney regarding your specific situation.

Working with or hiring a qualified advisor and/or Financial Planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any results, projections, or other information being represented in this presentation will be met or sustained.

RetirementGuideButton-Vert_blogs page


Our breadth of coverage across the U.S. means we’re local—here to serve your needs at your convenience.