When you are retired and no longer earning a paycheck, it becomes more important than ever to be responsible with your money.
For retirees, this means that there are a few key tasks to complete every year. With a new year coming around very quickly, seniors should be sure to put these two items on their to-do list to protect their financial security going forward.
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1. Rebalance your portfolio
Effective retirement planning doesn't end when you're actually retired. You still need to make sure you have the right investment mix. Otherwise, you could end up going through the money in your 401(k) too quickly and not have enough money to support yourself later in life.
One of the key tasks you need to take care of in 2026 is making sure you rebalance your portfolio. In fact, rebalancing is something that you should do every year. You need to adjust the mix of assets you are invested in because:
- Your risk tolerance changes as you get older
- Some of your investments may outperform others
As you get older and have less time to recover from a market downturn, you must make sure that you don't have too much of your retirement plan money in stocks. Otherwise, if there is a market crash at the wrong time, you could lose too much money too quickly. You may not have time to wait for the market to recover if you need to make withdrawals from your 401(k) or IRA, either because you need the money or to comply with required minimum distribution (RMD) rules.
If you aren't sure exactly what percentage of your money you should have invested, you can follow a simple rule of thumb. Subtract your age from 110 to determine how much of your portfolio should be in stocks.
You'll also want to take a look at what your money is invested in. If some of your investments have outperformed others, too much of your portfolio's value may be tied up in those particular investments. You'll likely want to move some of the money out to get a more balanced mix in case something were to go wrong with that outperforming investment in the future.
By taking a close look at your portfolio and readjusting as needed in 2026, you can make sure you have the right level of risk exposure to earn reasonable returns without being in serious jeopardy of suffering huge losses.
2. Confirm that you're maintaining a safe withdrawal rate
The next key task for 2026 is to confirm that you are maintaining a safe withdrawal rate in your accounts. That means you don't want to take out too much money too fast.
A traditional rule of thumb, called the 4% rule, says you can withdraw 4% in the first year of retirement. Then you adjust your withdrawals for inflation each year. This was supposed to give you around a 90% chance of your money lasting throughout retirement.
In recent years, the 4% rule has come into question, with some experts suggesting a safe withdrawal rate is actually lower now because of lower projected future returns and because people are living longer.
You may want to be more conservative, basing your withdrawals on IRS RMD tables, limiting withdrawals to around 3.7% of your portfolio as per the latest Morningstar recommendations, or working with a financial advisor to devise a personalized withdrawal strategy.
Whichever one of those options you select, the key is to make sure you aren't taking out so much money that you'll end up broke later in life. You can't comfortably live on Social Security alone, so you should make every effort to make your savings last.
If you take care of these tasks in 2026, this will do a lot to help preserve your financial security for the rest of your retirement. Do them as early in the year as you can, so you can go into 2026 feeling confident you've done all you can to build the retirement you deserve.
