One of the biggest shifts people experience when they retire is how they think about their investments.
During your working years, you’re used to adding money to your retirement accounts every month. Your focus is on saving, growing your investments, and building wealth over time. But once you retire, everything changes. Instead of contributing money to your accounts, you begin taking money out to generate income for the rest of your life.
That change requires a different investment mindset.
In this week’s Cardinal Advisors lesson, Tom and I walk through how we approach investment strategies for people who are retired or nearing retirement. We also explain the philosophy behind how we manage investments for clients who ask us to help with that part of their financial plan.
Retirement Investing Is About Income and Longevity
When people retire, the goal of investing shifts.
Instead of focusing only on growth, the focus becomes creating reliable income while managing risk. The money you’ve saved now needs to last for decades. For many retirees, that means building a portfolio that balances growth with stability.
For example, many retirees begin with a mix of stocks and fixed income investments. A common allocation might look something like:
- 70% equities (stocks)
- 30% fixed income (bonds or similar investments)
This balance allows retirees to continue participating in market growth while also having investments designed to provide stability and income.
Of course, there’s no single allocation that works for everyone. The right mix depends on several factors, including:
- Your age
- Your health and life expectancy
- Your comfort with risk
- Your income needs in retirement
Every financial plan should be customized to the individual.
Diversification Matters in Retirement
Once we determine the overall allocation between stocks and fixed income, the next step is deciding how to invest within those categories.
For equities, we typically recommend a diversified approach that includes both U.S. and international investments. For example, within the equity portion of a portfolio, we might allocate:
- 80% U.S. stocks
- 20% international stocks
Diversification helps reduce risk by spreading investments across many companies, industries, and regions.
Rather than trying to pick individual winning stocks, we often use low-cost exchange-traded funds (ETFs) to capture broad areas of the market.
These ETFs allow investors to own hundreds—or even thousands—of companies in a single investment.
A Factor-Based Approach to Investing
Another concept we discuss in the video is factor investing.
In simple terms, factors are characteristics that groups of companies share. Over long periods of time, certain types of companies have historically performed better than others.
Some examples include:
Quality
Companies with strong balance sheets, stable earnings, and low levels of debt.
Value
Companies that may be undervalued compared to their fundamentals.
Size
Companies in certain size ranges, such as mid-sized businesses.
Instead of dramatically changing portfolios to chase these factors, we typically tilt portfolios slightly toward them while still maintaining broad diversification.
The goal isn’t to make drastic bets on any one category, but rather to capture long-term advantages while staying diversified.
Keeping Costs Low and Strategies Simple
Another important part of our investment philosophy is simplicity.
Many investment strategies become overly complicated or expensive. High fees, frequent trading, and complex products can reduce long-term returns.
That’s why we often use low-cost ETFs and maintain a disciplined strategy that focuses on:
- Broad diversification
- Lower investment costs
- Periodic rebalancing
Portfolios are typically reviewed and adjusted periodically to keep them aligned with the original strategy.
Retirement Planning Is About More Than Investments
Investments are only one piece of the retirement puzzle.
At Cardinal Advisors, our planning process focuses on what we call the Seven Worries of Retirement, which include:
- Social Security
- Medicare
- Long-term care
- IRA and retirement accounts
- Income planning
- Taxes
- Estate planning
A successful retirement plan looks at all of these areas together, not just investment performance.
Sometimes clients ask us to manage their investments as part of that plan. Other times they simply want a financial plan and keep their investments where they are. Either way, our goal is to help people understand their options and make informed decisions.
A Strategy Designed for the Long Term
Most of the people who come to see us are in their 60s or approaching retirement. The investment strategies we build are designed to support them for decades.
Over time, many portfolios gradually shift toward slightly more conservative allocations as people age. For example, someone might begin retirement with a 70/30 portfolio and later move toward something closer to 60/40 or 50/50 depending on their needs.
The key is having a strategy that balances growth, income, and risk management so your money can support you throughout retirement.
Final Thoughts
Retirement changes how you think about investing.
You move from accumulating assets to using those assets to support your lifestyle. That shift requires a thoughtful strategy built around income, diversification, and long-term planning.
In this week’s Cardinal Advisors lesson, Tom and I walk through the philosophy behind how we approach retirement investing and how it fits into a comprehensive financial plan.
If you’re retired or getting close to retirement, understanding how your investment strategy should evolve can make a big difference in your long-term financial security.
And as always, if you have questions about your own situation, we’re happy to help.
