Financial advisers continue to identify four recurring errors that make it harder for retirees in the United States to preserve and expand their assets. The missteps—moving investments to cash too quickly, prioritizing immediate income over long-term growth, holding excessive cash reserves and overlooking tax implications—can diminish purchasing power over retirements that now commonly span three decades.
Switching to Ultra-Conservative Portfolios Too Soon
Chris Heerlein, chief executive officer of REAP Financial, observes that many clients shift the bulk of their portfolios into fixed income or cash equivalents shortly after leaving the workforce. Although the move feels safe, it may leave portfolios unable to keep pace with inflation or unexpected expenses such as medical care. Heerlein advises maintaining a 20%–30% allocation to growth-oriented assets to balance stability with capital appreciation. His guidance reflects the extended life expectancy of today’s retirees, who often need portfolios to last 25 to 30 years.
Focusing on Current Distributions and Ignoring Future Opportunity
The same tendency toward caution also leads some retirees to concentrate on predictable monthly payments at the expense of future flexibility. Heerlein notes that reinvesting part of market gains or keeping exposure to innovation-linked sectors can provide additional resources for gifts, lifestyle changes or charitable goals later in life. Without that growth component, retirees risk relying solely on principal withdrawals, which can accelerate portfolio depletion during market downturns.
