The Number One Portfolio Move Retirees Should Make Now to Avoid Losing Retirement Savings

With stocks near record highs and a global bond selloff underway, now might be a good time to check where you stand financially and rebalance your portfolio. Over time, a market that undergoes significant changes like the ones we're seeing now naturally throws off set asset allocations, and financial advisors are suggesting investors revisit their portfolios to make sure they reflect their goals and risk tolerances.

Here's what you should know about the current market conditions, what financial advisors are saying, and why you might want to consider rebalancing your portfolio.

The current market conditions

The S&P 500 has seen strong, double-digit gains since 2023 and remains up more than 11% in 2026. Factors like excitement surrounding technology companies and artificial intelligence have contributed to that market growth.

Bonds have faced a large selloff in recent months, and yields have reached multi-year highs.

These shifts mean some portfolios may have become stock-heavy and may now carry more risk than many investors are comfortable with.

What financial advisors are saying

Jude Boudreaux, a certified financial planner, recommended that investors consider rebalancing their financial portfolios, stating that though rebalancing may not be particularly exciting, he feels it's probably one of the most useful investment ideas.

Boudreaux explained that rebalancing is a "disciplined way to buy low and sell high, which historically is the fundamental idea of what to do in [financial] markets."

What portfolio rebalancing is

Rebalancing refers to a process in which investors revise their asset allocation so it reflects their original target level. Over time, changes in the market may shift those allocations, so an investor might revise their portfolio until it once again reflects a target allocation, like the classic 60/40 mix of stocks and bonds.

Investors rebalance a portfolio to better manage risk. Rebalancing also gives investors a chance to secure any gains they may have earned by creating a sell-high and buy-low scenario.

For example, if a certain stock has experienced significant growth, an investor might shift those gains into the bond side of their portfolio. With bond prices having fallen as yields have risen, investors who are already underweight bonds may find that rebalancing requires them to add to fixed-income holdings at higher yields than were available previously.

Rebalancing isn't about returns; it's about managing risk. Rather than chasing yield, rebalancing focuses on keeping the portfolio from becoming stock-heavy after a long run.

The accounts to rebalance first

Rebalancing a portfolio may have tax implications, and if investors sell off taxable stocks that have grown, they may have to pay capital gains taxes on those profits.

Consider rebalancing tax-advantaged accounts first, because trades inside these accounts generally don't create the same immediate capital-gains tax consequences as sales in taxable brokerage accounts. Your 401(k), Roth IRA, traditional IRA, health savings account, and 529 account are all examples of tax-advantaged accounts.

If you sell off an investment in a brokerage account at a profit, you might trigger immediate tax consequences. Consider consulting with an investment professional and a tax professional to ensure you understand how your decisions might affect your tax responsibility.

How to rebalance investments as a retiree versus someone still accumulating wealth

Retirees may have different rebalancing priorities than individuals who are still working and accumulating wealth in preparation for retirement. Retirees may want to reassess how much of their portfolio is exposed to market volatility and how much they need in liquid assets for near-term spending. For example, some retirees might choose to sell off stocks, putting profits into a cash account they may use for income.

Retirees may also need to reevaluate their risk tolerance. Someone who's 20 years out from retirement may be more comfortable with a more aggressive, higher-risk portfolio balance, since there's still plenty of time for the portfolio to rebound after market dips.

An individual near or in retirement may want to rebalance to bring their portfolio back in line with their desired risk level, since they may need to draw down some of those funds as income in the near future.

Bottom line

If it's time to revisit your investments and consider rebalancing, you can take several simple actions right now. To start, pull your current allocations so you know just where your investments sit. Then, compare those allocations to your initial target allocation and determine which changes you might need to make.

Remember to rebalance inside your IRA and other tax-advantaged accounts first, since selling and profiting off of taxable accounts might lead to tax consequences. And if you're uncertain about what to do, consult with a financial professional for help.

Doing so may be a valuable tool, whether you're ready to start investing with a new allocation or need some guidance on the best moves to make leading up to retirement.

This article is for informational purposes only and should not be considered investment advice.

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