The life-changing transition from the workforce to retirement is the subject of a growing body of literature as specialists study how people cope with the psychological pressures brought on by the abrupt change of lifestyle.

It’s different for everyone, but one vital aspect is common to most investors, and that involves financial security and the discomfort many experience as they switch focus from accumulating wealth to preserving it through a lengthy retirement.

It can be difficult to change an investment mindset.

If you’ve watched your portfolio grow nicely over long years of prudent accumulation, it may seem counterintuitive to shift a significant portion of your assets into fixed income, cash and cash alternatives that are likely to grow much more slowly, if at all.

Yet, the focus has changed.

Now you’re expecting some growth, but you’re also looking for a reasonably reliable and sensible income stream.

A gradual transition

Changing your focus from accumulation to preservation may be a little easier than some other retirement transitions if only because you can ease into it.

You can gradually begin switching some of your assets into the preservation lane several years before your retirement date if you’ve been saving diligently for decades.

If, as many have, you waited until you were in your 50s or 60s to get serious about retirement saving and constructed an aggressive portfolio in an attempt to catch up, you may need to make a sharper turn into wealth preservation.

As retirement nears, however much your investments have grown, you will soon require your portfolio to produce an income stream quite different from the occasional capital gains or dividends you’ve been reinvesting for years.

Many investors decide to keep a significant portion of assets in equities in order to give their portfolios the best chance of outpacing inflation, staying ahead of fast-rising medical costs and, most important, lasting for 25 or 30 years.

Regular income

You’ll quickly realize that nothing will precisely replace your paycheck.

The fixed income portion of your portfolio may well produce adequate income to support your lifestyle, but the total in any one month or year is subject to market risks and interest rate changes.

Those who study retirement lifestyles observe that the early years are likely to be the most expensive if you’re in good health and have elaborate travel plans. That can be a blow to your portfolio if your retirement date coincides with the onset of a bear market—imagine someone retiring as market values sank during 2008 and early 2009, no longer with decades to outlive the effects of bear markets or poor fixed income choices.

The market doesn’t care what you want to spend in retirement—to a large extent what your investments produce will be based on factors beyond your control.

If you’d like to discuss adjustments to your portfolio, please give me a call.

There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall, and when interest rates fall, fixed income prices rise.