Building wealth and living off it are two different jobs, and your portfolio likely needs to change when the job does.
During the accumulation years, the priority tends to be growth. Time is available to absorb volatility – a bad year in the market is an inconvenience, but not a crisis, because you’re still adding to the portfolio and have years to recover. In retirement, that buffer shrinks and withdrawals likely begin. The sequence of returns starts to matter in a way it didn’t before. Depending on your needs and the actions you take, a significant market decline in the first few years of retirement may permanently impair your portfolio in ways that the same decline five years earlier would not.
Understanding this shift is the starting point for sensible retirement investing.
Your Portfolio Needs to Do More Than One Thing
A retirement portfolio typically carries three simultaneous responsibilities: generating income to cover living expenses, preserving enough capital so that the portfolio lasts, and growing enough to protect against inflation over what could be a 25 to 30-year retirement.
That last point deserves emphasis. A 2.5% annual inflation rate erodes purchasing power by roughly 46% over 25 years. A retiree who avoids equities entirely to protect against short-term volatility may find that a portfolio that felt adequate at age 65 covers significantly less of their lifestyle by age 80. Even conservative investors need to consider some equity exposure in retirement for this reason.
How Your Asset Mix Should Shift as Retirement Approaches
The mix of stocks, bonds, and cash in a portfolio should be reviewed periodically, inclusive of before and after you have retired. The right balance depends on time horizon, income needs, risk tolerance, and how other income sources like Social Security or a pension factor into the overall picture. What changes as retirement approaches typically is not whether to hold these asset classes, but how much of each and why.
Growth equities (companies with above-average revenue and earnings growth) remain relevant in retirement as the engine of long-term purchasing power preservation. They carry more short-term volatility, which is manageable when you have decades ahead of you. As retirement draws closer and withdrawals begin, the growth equity allocation typically shrinks, but not because growth becomes irrelevant, rather because a portfolio that is too heavily weighted toward growth equities creates pressure to sell at the wrong time. A significant market decline early in retirement that forces liquidation of growth positions to fund living expenses turns a temporary loss into a permanent one.
Income-oriented equities (dividend-paying stocks) tend to grow in proportion in the average portfolio as retirement approaches. Companies with durable dividend histories add some predictability to cash flow planning, providing a layer of income to support retirement spending while also potentially contributing to purchasing power preservation. Dividends are not guaranteed and stock prices can still fall, but income equity serves a different purpose than pure growth.
Fixed income (such as bonds and similar instruments) also typically plays a larger role when nearing and in retirement as opposed to during accumulation. Bonds generate more predictable income through defined interest payment schedules and tend to respond differently to market conditions than equities. The shift toward more fixed income as retirement approaches is essentially a shift toward stability and income predictability, trading some long-term growth potential for the ability to fund withdrawals without being forced to sell equities at the wrong moment.
There is no universal formula for how much of each to hold. A 60-year-old with a pension covering most living expenses and a high risk tolerance likely will hold a very different portfolio from a 63-year-old with no guaranteed income outside of Social Security. The asset mix should follow the individual’s actual situation, not a rule of thumb.
Taxes Become More Visible in Retirement
When a salary stops and investment withdrawals begin, taxes become a more active planning challenge. Dividends, bond interest, and realized capital gains all create taxable income. The accounts you draw from, in what order, and in what amounts can meaningfully affect how much of your retirement income you actually keep.
Tax-deferred accounts like traditional IRAs and 401(k)s provide tax benefits during accumulation, but generate ordinary income tax when withdrawn. Roth accounts, funded with after-tax dollars, allow tax-free withdrawals and have no required minimum distributions (RMDs) during the owner’s lifetime. Taxable brokerage accounts create their own considerations, as dividends and interest generate annual taxable income, and selling appreciated positions triggers capital gains.
RMDs begin at age 73 for IRAs and can push retirees into higher tax brackets if not planned for deliberately. Roth conversions in lower-income years also can reduce future RMD obligations and the associated tax burden.
None of these decisions exists in isolation. The interaction between investment decisions and tax outcomes is why coordinated planning between an investment manager and a CPA may produce meaningfully better results than the alternative.
Wealth Transfer and Philanthropy Belongs in the Retirement Investment Conversation
How a retirement portfolio is structured also affects how efficiently assets pass to the next generation or to charitable causes.
Annual gifting is one of the most straightforward mechanisms. In 2026, individuals can give up to $19,000 per recipient per year – $38,000 for married couples giving jointly – without triggering gift tax or eating into the lifetime exemption. For families with adult children or grandchildren, systematic annual gifting can meaningfully reduce a taxable estate over time while transferring wealth during the donor’s lifetime rather than through probate. The federal lifetime gift and estate tax exemption currently stands at $15 million per individual in 2026, meaning assets transferred above that threshold during life or at death may be subject to federal estate tax.
Gifting appreciated securities directly to charity allows the donor to avoid recognizing capital gains while receiving a charitable deduction. The structure of the investment portfolio and the retirement income plan should account for these transfer objectives from the beginning rather than treating them as a separate conversation.
How Godsey & Gibb Approaches Retirement Investing
The decisions described above such as asset allocation, withdrawal sequencing, tax coordination, and wealth transfer planning are not independent choices. They affect each other in ways that become more consequential the closer you are to or the further you are into retirement.
At Godsey & Gibb Wealth Management, we build customized portfolios across growth equity, income equity, and fixed income rather than relying on one-size-fits-all fund models. Each client works with a dedicated fiduciary advisor supported by in-house CERTIFIED FINANCIAL PLANNERS® and CPAs who coordinate on the same plan. For affluent retirees and near-retirees in the Richmond, Greenville, Phoenix Metro, and Jacksonville areas, we’d welcome a conversation about how your portfolio, tax strategy, and retirement income plan can work together. Schedule a conversation here.