HEADS UP: INVESTING IN RETIREMENT isn’t the same as investing for retirement. All the smart strategies you used to help you accumulate enough for retirement will likely need adjusting as you approach and enter the next chapter of your life.

1. Review your asset allocation with new risks in mind.

In mid-career, you could afford to be more aggressive with your portfolio in pursuit of gains. After you leave the workforce, though, because you’re drawing down those assets rather than contributing to your 401(k), and have less time to recover from market drops (see Rule 4), a more conservative approach may make sense. But at the same time, being too conservative heightens the risks of outliving your money and failing to keep pace with cost-of-living increases.

Consider that even a modest annual inflation rate of 2.5% would erode the spending power of a dollar by 46% over a 25-year period. (See the chart below.) And at least one spouse in a couple, both age 65, has a 50% chance of reaching 92 — and a 10% chance of reaching 100.¹

Discuss with your advisor: Are your current fixed income and dividend stock investments sufficient to supply you with the income you’ll need over many years in retirement, given the potential for inflation and market volatility? And will your current asset allocation provide the potential growth you may need to cover another 20 years or more? Finding the right balance for your personal situation is key. See Rules 2 and 3.

2. Prioritize your immediate cash needs.

If your non-investment income (Social Security, a pension, income from a part-time job) covers all or most of your essential expenses — healthcare, housing and so on — you can take on more investing risk. If not, you may want to adjust your mix so that more of your investments are lower-risk assets, such as U.S. Treasuries, high-grade corporate bonds or annuities, and earmarked to provide a guaranteed income stream that can help fund your basic needs.

“You want a high level of certainty around the investments that are supporting your essential lifestyle,” Suri says. “Beyond that, you need to pursue more growth.” And as you assess your essential, more flexible (travel, buying a vacation home, etc.) and aspirational (charitable giving) expenses so you can invest accordingly, keep in mind that you may end up spending more than you anticipated in retirement, especially on healthcare.

3. Don’t abandon stocks.

“When you reach retirement, you may feel like you’re taking on a lot more risk than you want to with your equity investments,” says Suri. But while stocks are susceptible to short-term price swings, they also give you the best chance of staying ahead of inflation and helping your money last.

While you may have previously felt comfortable with an aggressive equity allocation, you and your advisor could now find that a more balanced allocation, say 50% to stocks and 50% to bonds, provides the greatest likelihood of providing you with the growth you need.

Take a look at how various allocations could perform over time below.

4. Prepare for volatility, especially early in your retirement.

“Volatility is unnerving for any investor and can be especially damaging early in retirement,” says Nevenka Vrdoljak, a managing director in the Chief Investment Office for Merrill and Bank of America Private Bank. When you’re investing for retirement, you’re likely making regular contributions to your 401(k). Once you leave the workplace, however, you’re not only withdrawing funds regularly, but you’re also no longer making fresh 401(k) contributions (and you can fund an IRA only if you have earned income).

At this stage, with any stake in stocks, you need to guard against what’s called sequence of returns risk. It’s what happens when a steep market drop in the first few years of retirement forces you to draw down stocks for your income needs at depressed prices. You may find you have to withdraw more than you’d intended, which in turn could have an outsized impact on your remaining wealth.

That’s why it’s a good idea to review the amount of liquidity you have in your portfolio as you enter retirement. Having cash and short-term bonds or bond ladders on hand can help you navigate down markets, says Vrdoljak. “Adding more guaranteed income could also help minimize sequence of returns risk,” she adds. “You might enhance your income by purchasing a lifetime annuity or delaying the age when you claim Social Security.” That larger benefit can let you draw down less from your investments later.

5. Stick to your plan — and review it regularly.

Creating a solid retirement investment strategy is one thing; sticking to it is another. “We’re prone to both overconfidence and underconfidence,” Suri says. And our emotions can sometimes cause us to act too hastily when markets get volatile, particularly in retirement. If you have an advisor or have considered working with one, they can help you avoid emotional mistakes during such times.

Reviewing your plan regularly with the help of your advisor — quarterly or, at a minimum, once a year — just as you did when you were saving for retirement, can also help you feel more in control. But remember, just by having a plan in place, you’re at an advantage. “One of the greatest threats to a secure retirement is the failure to have a plan,” Vrdoljak says. Developing a retirement investing plan — and sticking to it through the ups and downs of the market — may be the most important rule there is.