9 Tips for Good Post-Retirement Investing in a Post-Pandemic World


Many people are under the misconception that post-retirement investing stops once a person begins drawing from retirement and they will no longer be investing. This is not the case for most. For those who continue to invest post-retirement, the pandemic might mean that you need to make some changes in your strategy. Here are 9 tips for post-retirement investing in a post-pandemic world.

1. Protect Income Streams

The pandemic meant that income sources were at risk for many, not just those in retirement. Rental properties went unoccupied, jobs disappeared, and many investments that used to be safe havens were no longer available. The safety of investment income was also challenged during this time. Protecting income streams continues to be a key concern in the retirement years, especially when it comes to investment income. If you find your income streams at risk, it might be time to consider adding a few passive income sources to your revenue streams.

2. Post-pandemic Spending Habits

The pandemic changed the way many people spend money. Lockdown put a damper on things like vacations, air travel, and restaurants. People found that it was much easier to save with these extras not available. Unfortunately, many developed an unrealistic picture of what it takes to live in retirement. Now, with travel and some of these extras returning, it is time to rethink your spending to account for them. New retirees have to be especially careful of underestimating their budget due to forgetting to include entertainment and other items in the budget that are once again becoming an important part of life.

Investing During a Down Market

3. Investing During a Down Market

Investing in an up market when you are trying to accumulate wealth pre-retirement is different from investing once you begin withdrawing money. Also, many stocks have taken a plunge in the post-pandemic world. When you are accumulating shares, the down market means that you can take advantage of some good deals. After retirement, when you are withdrawing your funds, it could mean that you must sell your shares at a loss. The best bet is to have a majority of your savings in low-risk investments if you are post-retirement and must withdraw your funds.

4. Beware of Inflation

If you have purchased items like gas and food lately, you already know that inflation is on the rise. Inflation and the cost of goods can mean draining your retirement more quickly. Taking on additional risks, such as equity positions, might help to balance the cost of rising food and gasoline prices. It is expected that the supply chain issues will begin to resolve over the next 12 months, which will help to alleviate this burden for retirees. Increasing income-producing investments and finding ways to cut back are the most effective ways to offset the drain on your retirement account caused by inflation.

5. Find the Right Post-Retirement Investing Strategy

In post-retirement, it is important to find an investment strategy that is a perfect fit. This means not taking on the risk and investing at higher rates of return than necessary. For instance, if you perform an analysis, and it says that a 5 percent rate of return will be sufficient, then you do not need to invest at a 10 percent rate of return and take on the extra risk. You can find the perfect rate of return using this compound interest calculator. One strategy is to separate what you need for retirement from what you intend to pass on to your heirs.

6. Plan in Five-Year Segments

Financial advisors suggest planning for retirement by breaking it down into five-year segments. Every five years after retirement has its own unique set of needs. What you need between 65 and 70 will be different from what you need from 80 to 85. Investing during the first few five-year segments should be done more conservatively than money invested in the later years. In developing your investment strategy, it is important to remember that shares sold for income during a market decline can never be replaced.

7. 60-40 Rule Is Outdated

The 60-40 rule says that your portfolio should be 60 percent equities and 40 percent bonds, but this only works when bond yields are above inflation. Currently, bonds are paying yields below inflation, which is called a “negative real rate.” Now, you can no longer use bonds to reduce risk. This means that it might be time to consult a professional for some creative ideas about how to overcome this challenge, such as investing in strategies that have the potential to make money in both up and down markets.

Consider Real Assets

8. Consider Real Assets

Real assets, such as real estate, are a popular investment strategy during times of high inflation. Other real assets include commodities and natural resources. Investment instruments like REITs and oil and gas pipelines can often pay substantial dividends. They also appreciate in value as oil prices rise. When you see rising prices, you need to think about them as an investment during times of uncertainty. Another option is to consider owning a rental yourself. This can afford higher market returns than traditional investments in a market decline.

9. Make the Mental Shift

In the pre-retirement years, you are in an accumulation mindset. After retirement, you need to shift to a preservation strategy. Just as you drew up a plan for the accumulation of wealth, you must also develop a planned strategy for drawing down your retirement savings. In developing this strategy, make sure to include all sources of income, including annuities, IRAs, Social Security, and any other retirement accounts.

The pandemic changed the markets, and it changed the way you need to invest for everyone. This is especially true for those in their post-retirement years. The biggest risk is that you will draw down your retirement savings too quickly and end up in financial difficulty. One of the biggest challenges is maintaining income as you watch stock prices fall. These tips should help you have a little peace of mind and develop a strategy that will help your retirement savings last through your later retirement years.