As you think about moving from working for a living to living comfortably in retirement, there can be a lot to juggle—budgets, savings decisions, investments, taxes, and the “what ifs” life inevitably throws your way. If the last few months felt busy (and maybe a bit expensive), this is a good time to pause and make sure a few fundamentals are still on track.
Whether retirement is next year or a couple decades away, these five checkpoints can help you build confidence in your plan.
1) Keep a Cash Emergency Fund (Because Cash Is Still King)
Market ups and downs are a good reminder that your long-term investments and your short-term needs shouldn’t compete with each other. A dedicated cash reserve can help you avoid selling investments at an inopportune time if an unexpected expense shows up.
A practical starting point is to:
- Estimate your essential monthly expenses (housing, utilities, insurance, groceries, transportation, and required debt payments).
- Set aside roughly six months of those “must-pay” expenses in a readily accessible savings or money market account.
Will that cash always keep up with inflation? Not necessarily. But the goal of an emergency fund isn’t maximum return- it’s stability and access. Think of it as financial “shock absorbers” that can reduce stress and help you stick with your long-term strategy when markets get uncomfortable.
2) Save a Meaningful Amount Each Year
A common rule of thumb discussed in retirement planning is saving a consistent percentage of income over time. Many people hear numbers like 15%–20% and feel discouraged, especially if they’re balancing college costs, caregiving, or a mortgage.
Two important points:
- Progress matters more than perfection. If you’re not at your target savings rate today, increasing contributions gradually (for example, 1% each year or with each raise) can be a realistic way to build momentum.
- Retirement accounts are designed for retirement. Paying down debt and building home equity can be valuable, but it doesn’t always translate into spendable retirement income the same way a workplace plan (like a 401(k)) or an IRA can.
If you have access to an employer retirement plan, consider reviewing your contribution rate and whether you’re taking full advantage of any employer match.
3) Invest What You Save (So Inflation Doesn’t Quietly Erode Progress)
Saving is step one; investing is step two. Over long periods, inflation can steadily raise the cost of everyday life, meaning the dollars you’ll spend in retirement need to stretch further.
A long-term investment approach often includes some exposure to stocks, because historically stocks have tended to outpace inflation over time more than cash or high-quality bonds. Of course, stocks can be volatile and may decline in value, sometimes sharply.
That’s why the goal isn’t to “beat the market this year.” It’s to build a portfolio aligned with:
- your time horizon
- your comfort with risk
- your income needs and other resources
A clear strategy can help you stay disciplined when the headlines are noisy.
4) Diversify What You Invest (To Reduce Single-Outcome Risk)
Diversification means spreading investments across different types of assets and segments of the market so that no single holding, sector, or country determines your financial destiny.
A diversified approach may include a mix of:
- U.S. and international stocks
- different company sizes (large, mid, and small)
- various bond categories and maturities
- other diversifiers depending on your situation
Diversification does not guarantee a profit or protect against loss, but it can help manage volatility and reduce the risk that one weak area of the market derails your entire plan. History has shown that diversification generally leads to less volatility over time
For retirees or near-retirees, diversification can be especially important because the sequence of returns (the market’s performance early in retirement) can impact how long a portfolio lasts.
5) Keep It Simple (Lower Costs and Better Understanding Can Be Powerful)
Complexity isn’t automatically bad—but it should earn its keep. Many investors benefit from funds like Vanguard Total US Stock (VTI) exchange-traded fund (ETF) owns all U.S. traded stocks or iShares Core Aggressive Allocation (AOA) ETF owns U.S. and International stocks, US and International bonds.
Simplicity can help in two ways:
1. Lower costs. Investment costs matter because they compound over time. Reducing unnecessary fees can improve the odds that your returns keep more of their value after expenses.
2. Clarity. When you understand what you own and why you own it, it can be easier to stay invested during volatility.
For some households, especially early in the accumulation years, one or two broadly diversified funds may provide meaningful coverage across markets. As portfolios grow and goals become more specialized (tax planning, charitable giving, legacy planning, required distributions, and income strategy), a portfolio may evolve. The key is that each piece should have a purpose.
A Note About Professional Guidance
If these checkpoints raise questions- how much cash is “enough,” whether your savings rate is realistic, how to invest appropriately, or how to transition from a paycheck to retirement income- consider speaking with a qualified financial professional.
A comprehensive financial plan can connect all the moving pieces- investments, retirement income, taxes, insurance, estate considerations, and your personal priorities- so you feel more prepared for the next stage.
A CFP® professional can help you make great retirement income choices and develop a comprehensive financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand your options at every step along the way.
Yes, I am a CFP® professional. And yes, I’m still taking on a few great families to be part of my financial planning practice.
If this article has you thinking about your own circumstances, contact me to set up a no-obligation meeting. I am always happy to meet with people who are working on their retirement plans.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.
Remember: All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. A diversified portfolio does not assure a profit or protect against loss in a declining market.
Frequently Asked Questions
1) How much should I keep in my emergency fund if I’m close to retirement?
A common starting point is about six months of essential expenses, but some near-retirees prefer more if their income is variable or they’re worried about a job transition. The right number depends on factors like household stability, health insurance costs, and how comfortable you are riding out market volatility.
2) If markets are volatile, should I stop investing or move everything to cash?
Pausing or abandoning a long-term plan can lock in fear-based decisions that are hard to reverse. Instead, it’s often more effective to review your time horizon, diversification, and cash needs so your investment strategy matches the role each dollar is meant to play.
3) Are low-cost index funds “enough,” or do I need a more complex portfolio?
For many investors, broadly diversified, low-cost funds can serve as strong core holdings and help keep the plan easy to maintain. As your situation changes- retirement income planning, tax strategy, or legacy goals- additional customization may be useful, but complexity should always be intentional.